Keysight Technologies Posts Record Quarter on AI Infrastructure and 6G Surge
The test and measurement company reported 36% revenue growth and 56% order growth, driven by wireless, wireline, and aerospace demand.
Record Performance Across All Segments
Keysight Technologies (KEYS) delivered a standout third quarter for fiscal 2026, posting revenue of $1.846 billion, up 36% year-over-year, and earnings per share of $3.07 (earnings call, 2026-08-18). Orders surged 56% to $2.91 billion on a reported basis, with core growth of 52% excluding acquisitions and currency impacts.
Operating margin reached 33.2%, up 820 basis points year-over-year and exceeding the company's long-term target range of 31% to 32%. CFO Neil Dougherty attributed the outperformance to "further acceleration in our commercial communications business and ongoing strength in Electronic Industrial Solutions and aerospace, defense and government" (earnings call, 2026-08-18).
AI Infrastructure Drives Wireline Milestone
The Communications Solutions Group generated revenue of $1.345 billion, up 43% on a reported basis. Within this segment, the commercial communications business achieved its first $1 billion quarter, with revenue of $1.06 billion, up 56%. Notably, wireline revenue exceeded wireless revenue for the first time, driven by AI data center infrastructure validation needs.
CEO Satish Dhanasekaran highlighted the company's positioning across the AI ecosystem: "Silicon designers are adopting Keysight's recently introduced high-performance digital and RF solutions for the lab to validate new designs with system-level requirements to ensure interoperability, performance and reliability" (earnings call, 2026-08-18).
President of the Communications Solutions Group Kailash Narayanan noted that design complexity is intensifying demand: "With higher data rates, lower latency, AI needs to be lossless... customers are seeing they can no longer guarantee anything by design. They also need to test it in production as well" (earnings call, 2026-08-18).
6G and Defense Expansion
Wireless orders grew significantly, driven by early investments in next-generation 6G connectivity. Dhanasekaran referenced the June 3GPP plenary meeting in Singapore, which confirmed industry direction around higher speeds and new spectrum, including AI RAN, integrated sensing and communication, and non-terrestrial networks.
The aerospace, defense, and government segment generated $339 million in revenue, up 14%, with orders up double digits across all regions. The company attributed growth to "heightened global focus on deterrence" and accelerating shifts to advanced radar architectures (earnings call, 2026-08-18).
Strong Margins and Integration Progress
The Electronic Industrial Solutions Group achieved record revenue of $501 million, up 21%, with growth across general electronics, semiconductor, and automotive and energy markets. EISG operating margin reached 31%.
Dougherty provided an integration update on recent acquisitions, noting that systems migrations completed one quarter ahead of schedule. The company now expects to realize 80% to 90% of its $100 million cost synergy target on a run-rate basis by fiscal year-end, accelerated from previous expectations.
Software and services grew double digits to represent approximately 33% of revenue, while annual recurring revenue comprised 24% of the total mix. The company generated $437 million in operating cash flow and $403 million in free cash flow during the quarter.
Outlook
For the fourth quarter of fiscal 2026, Keysight expects revenue of $1.930 billion to $1.950 billion, representing 37% year-over-year growth at the midpoint, and earnings per share of $3.34 to $3.40, representing approximately 76% growth. This guidance implies full-year fiscal 2026 revenue growth of 32% and EPS growth of approximately 60% at the midpoint.
This article was generated by MarginX from the earnings call on 2026-08-18. It is not investment advice.