Segment Performance
The Communication Solutions segment saw robust order growth, outpacing revenue growth of 27% in the quarter, driven by both commercial communications and aerospace, defense, and government markets. The EISG segment also performed well, with orders growing for the third consecutive quarter and revenue reaching a record high. The strong performance was driven by double-digit growth across all three EISG markets: general electronics, semiconductors, and automotive and energy.
Guidance and Outlook
Keysight expects revenue to be in the range of $1.690 billion to $1.710 billion for the second quarter of 2026, representing 30% year-over-year growth at the midpoint. The company also expects EPS to be in the range of $2.27 to $2.33, representing 35% year-over-year growth at the midpoint. For the full fiscal year, Keysight expects all-in revenue growth of around 20%, with a moderate growth in the second half.
Valuation and Growth Prospects
With a P/E Ratio of 54.13 and an EV/EBITDA of 35.94, Keysight's valuation suggests that the market is pricing in significant growth prospects. Analysts estimate next year's revenue growth at 6.5%, which may be conservative given the company's current momentum. The company's ability to deliver on its growth prospects, particularly in areas such as AI and 5G, will be crucial in justifying its current valuation.
AI and Emerging Technologies
Keysight is well-positioned to benefit from emerging technologies, including AI, 5G, and non-terrestrial networks (NTN). The company's AI-related business saw robust order growth, and it is expanding its presence in the neoclouds segment. As Satish Dhanasekaran noted, "We're seeing concurrent parallel technology waves, with technologies like silicon photonics, optics, and electrical transmission driving innovation." This positions Keysight for long-term growth and potentially justifies its premium valuation.