Keysight Technologies (KEYS) Q2 2026 earnings show 31% revenue growth, 69% EPS increase, and strong AI expansion. Explore key insights and outlook.
Key Takeaways
- Revenue increased by 31% year-over-year, reaching $1.72 billion.
- Earnings per share (EPS) grew 69% to $2.87, significantly beating analyst expectations.
- Orders surged 56% year-over-year, surpassing $2 billion, driven by strong demand in AI and defense sectors.
- Free cash flow reached a record $472 million, underlining the company’s strong financial health.
- Management raised revenue growth guidance for FY 2026 to the high 20s percent, reflecting robust market demand.
Financial Performance
Keysight Technologies, Inc. reported an impressive fiscal Q2 2026, showcasing a remarkable financial performance that sets new benchmarks for the company. The total revenue rose to $1.72 billion, marking a 31% increase compared to the same quarter last year. The earnings per share (EPS) saw a striking 69% growth, reaching $2.87, which surpassed consensus estimates by a significant margin.
The company’s order intake was particularly noteworthy, with total orders amounting to $2.05 billion, representing a 56% year-over-year growth. Of this, a considerable portion can be attributed to core growth factors, including the booming AI sector and ongoing investments in defense technology. Gross margins maintained a solid level at 72.3%, reflecting efficient cost management amidst rising demand.
Neal Doherty, CFO of Keysight, emphasized that the company's organic business growth, excluding one-time impacts from tariff refunds, delivered an operating margin of 30.4%, a significant increase of 520 basis points year-over-year.
Strategic Initiatives
Keysight continues to capitalize on emerging market trends, particularly within the AI and defense sectors. The company reported rapid growth in its Communications Solutions Group, where revenue rose 35% year-over-year. Significant advancements in wireline business, driven by AI data center expansions, were highlighted as a key growth pillar. The company has rolled out new scale-up validation solutions, focusing on performance characterization to meet the increasing complexity of AI infrastructure scaling.
Moreover, Keysight is actively involved in 6G research and non-terrestrial networks (NTN), positioning itself to capture future growth opportunities as the industry evolves toward advanced wireless architectures. The collaboration with Qualcomm and Samsung in developing AI-related workflows and RF Digital Twins further illustrates Keysight’s commitment to innovation.
In the Electronic Industrial Solutions Group, revenue also hit new heights, driven by demand across semiconductors, automotive, and energy sectors. This segment's growth reflects the company's strategic investments in R&D and collaborations with leading foundries, enabling faster development and commercial ramp timelines in increasingly complex chip architectures.
Future Outlook
Management has raised its revenue growth expectations for fiscal 2026 to the high 20s percent, a positive reflection of the strong performance in the first half of the year and the solid pipeline of opportunities ahead. Keysight anticipates revenue for Q3 to be in the range of $1.73 billion to $1.75 billion, suggesting a 29% year-over-year growth at the midpoint. EPS for Q3 is projected between $2.43 and $2.49, indicating a 43% increase year-over-year.
The company is also focusing on enhancing its capital expenditures, now expected to reach $200 million for FY 2026, aimed at supporting higher growth levels as it integrates recent acquisitions and expands its product pipeline. With a robust cash position of $2.41 billion and record free cash flow, Keysight is well-positioned to capitalize on its strategic initiatives and maintain its market-leading status.
“The strong results we’re delivering in fiscal 2026 reflect the execution of our strategy... This framework has guided our disciplined organic and inorganic investments.” – Satish Dhanasekaran, CEO.
Closing Assessment
Keysight Technologies, Inc. has demonstrated exceptional growth and resilience in its Q2 2026 earnings call. With record revenue, significant order growth, and a strong outlook for the remainder of the fiscal year, the company is well-equipped to navigate the evolving technology landscape. Its strategic focus on AI, defense, and emerging communication technologies positions it favorably for sustained long-term value creation.
Investors should view this performance as a clear indicator of Keysight's operational efficiency and market adaptability, ensuring its continued leadership in critical sectors. The company’s commitment to innovation and strategic investments will likely drive further growth in the coming quarters, making it an appealing prospect for investors seeking opportunities within the technology sector.
This analysis is based on public earnings call materials and is not investment advice.
