Key Stats: Keysight Technologies (KEYS) — Q2 FY2026
- Current price: ~$344 (May 19, 2026)
- Q2 revenue: $1.717B, up 31% YoY
- Q2 adjusted EPS: $2.87, up 69% YoY
- Q2 orders: $2.051B, up 56% YoY
- Q2 free cash flow: $472M (record)
- FY2026 revenue guidance: High-20s percent growth
- Q3 FY2026 revenue guidance: $1.730B to $1.750B (midpoint ~29% YoY growth)
- Q3 FY2026 EPS guidance: $2.43 to $2.49 (midpoint ~43% YoY growth)
- TIKR model price target: $325.13
- Implied return: (5.5%) over 4 and a halfyears / (1.3%) annualized
Keysight Technologies Stock Delivers Best Quarter in Company History as AI Orders Hit $2 Billion
Keysight Technologies stock (KEYS) delivered its best quarter in company history in fiscal Q2 2026, with revenue of $1.717B up 31% and adjusted EPS of $2.87 up 69% year over year.
Orders of $2.051B grew 56% and surpassed $2B for the first time, with acquisitions adding 700 basis points and currency adding 100 basis points, for 48% core growth, according to Neil Dougherty, Executive Vice President and CFO, on the Q2 earnings call.
The Communications Solutions Group was the headline driver, generating revenue of $1.231B, up 35% on a reported basis and 27% on a core basis.
Within CSG, Commercial Communications produced $858M in revenue, up 40%, with strength in both wireless and wireline, while Aerospace, Defense and Government delivered $373M, up 24%.
The Electronic Industrial Solutions Group posted $486M in revenue, up 24%, with record orders and revenue across all three end markets: general electronics, semiconductor, and automotive and energy.
According to Satish Dhanasekaran, President and CEO, on the Q2 earnings call, Keysight’s AI-related business in the first half of FY2026 already surpassed the full-year level achieved in 2025, with the first half finishing in the $500M to $600M range.
Gross margin came in at 67.6% excluding one-time tariff refund impacts, up 300 basis points year over year, while operating margin on the same adjusted basis reached 30.4%, up 520 basis points, reflecting 49% operating leverage.
Keysight Technologies stock also notched record free cash flow of $472M and repurchased approximately 780,000 shares at an average price of ~$283 per share for $220M in total.
For Q3 FY2026, the company guided revenue of $1.730B to $1.750B, representing ~29% growth at the midpoint, and EPS of $2.43 to $2.49, representing ~43% growth at the midpoint.
Management raised its full-year revenue growth outlook to the high-20s percent range, up from prior expectations, citing the strong first half and a solid pipeline heading into the second half.
Operating Leverage Accelerates as Keysight Recovers From a Two-Year Revenue Trough
Keysight Technologies stock has been executing a consistent operating leverage recovery after a prolonged revenue contraction that bottomed in mid-2024.
Revenue troughed at $1.22B in both Q1 and Q2 FY2024, with YoY growth running negative at (12.5%) and (11.9%) respectively, before returning to positive territory at 3.1% in Q4 FY2024.
From Q1 FY2025 through Q1 FY2026, growth accelerated sequentially: 7.4%, 11.1%, 10.3%, and 23.3%, setting the stage for the 31% print this quarter.
Gross margin held in a tight band through the trough, ranging from 61.2% to 63.2% across the eight quarters shown, reflecting the high mix of software and services in Keysight’s revenue base.
Operating income followed a sharper trajectory: it fell as low as $200M in Q1 FY2024 with operating margins compressed to 16.3%, before recovering steadily to $260M and 16.3% by Q1 FY2026.
According to Dougherty on the Q2 earnings call, the mid-67% gross margin range is the appropriate post-acquisition baseline at current volumes, with the accretive impact of recent acquisitions now embedded in the structure.
Software and services accounted for approximately 36% of total revenue this quarter, with annual recurring revenue representing 27% of total mix, both of which provide a durable floor under the margin profile.
The TIKR Model Prices KEYS Below Today’s Market — Even After a Record Half
The TIKR model prices Keysight Technologies stock at a mid-case target of $325, implying a (5.5%) total return over 4 and a half years and an annualized return of (1.3%) from the current price of ~$344.
The model’s mid case assumes a revenue CAGR of 7%, a net income margin of near 24%, and EPS growth of around 7% annually through 2035, with a P/E multiple contraction of (2.3%) per year baked into the assumptions, meaning the model explicitly prices in a valuation de-rating even as earnings grow.
The high case, which assumes a revenue CAGR of 7.6% and a net income margin of 25%, produces a stock price of $416 and a total return of 21%, while the low case at 6% revenue CAGR and 22% net income margin yields $267 and a (22.4%) total return.
The record quarter and raised guidance do not resolve the core tension in the valuation: at ~$344, Keysight Technologies stock is not priced for the mid case — it is priced for an outcome closer to the high case, leaving little room for the investment thesis to disappoint.
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