Keysight Technologies, Inc. KEYS is benefiting from strong momentum in its Communications Solutions Group (CSG). In the third quarter, CSG generated $1.35 billion in third-quarter fiscal 2026 revenues, up 43% year over year, accounting for roughly 73% of total company revenue. The segment also delivered a 70.8% gross margin and 34.0% operating margin.
The Commercial Communications business was the biggest contributor to CSG's growth. Revenues reached $1.006 billion, up 56% year over year, marking its first billion-dollar quarter. Wireline revenues more than doubled year over year and exceeded Wireless revenues for the first time. The trend reflects increasing testing requirements in high-speed connectivity and AI data-center infrastructure.
In the third quarter of fiscal 2026, wireless orders grew again as customers increased spending on next-generation connectivity and the supply chain supporting AI infrastructure. The Third Generation Partnership Project (3GPP) timeline now targets the first 6G standard for March 2029, and management said customers are moving from exploratory research into funded development programs. This can lead to strong growth prospects in the long run.
Aerospace, Defense and Government also contributed to CSG's performance. Revenues in this business increased 14% year over year to $339 million. Orders grew double-digit. Demand was driven by advanced radar architectures, autonomous platforms, satellite systems and resilient positioning, navigation and timing solutions. Backed by favorable trends, KEYS expects fourth-quarter fiscal 2026 revenues of $1.93-$1.95 billion, implying approximately 37% year-over-year growth at the midpoint.
How Are Competitors Faring?
Viavi Solutions Inc. VIAV is a leading provider of network test, monitoring and service enablement solutions to diverse sectors across the globe. The product portfolio of the company offers end-to-end network visibility and analytics that help build, test, certify, maintain, and optimize complex physical and virtual networks. Revenue growth in NSE remains tied to demand from the data center ecosystem and aerospace and defense markets. NSE revenues rose 69.2% year over year to $353.9 million in the fourth quarter of fiscal 2026.
Teradyne, Inc. TER develops automated test equipment and robotics products. AI-driven revenues exceeded 60% of second-quarter sales as total revenues reached a second consecutive record of $1.33 billion and non-GAAP EPS rose to $2.47. Management now expects first-half revenue to represent 50% to 52% of the full year, versus the prior 55% to 60% view, reflecting better second-half visibility. Memory, auto and industrial, IST, Product Test and Robotics are expected to grow sequentially in the second half.
KEYS’ Price Performance, Valuation and Estimates
Keysight has gained 102.6% in the past year compared with the Electronics - Measuring Instruments industry’s growth of 91.3%.
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Going by the price/earnings ratio, the company’s shares currently trade at 25.6 forward earnings, lower than 27.23 for the industry and lower than its mean of 30.45.
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The company’s earnings estimates for 2026 and 2027 have improved over the past 60 days.
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KEYS sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
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This article originally published on Zacks Investment Research (zacks.com).