Keysight Technologies has delivered a robust performance for its fiscal third quarter of 2026, with revenue and profit exceeding consensus estimates on the back of surging demand tied to artificial intelligence infrastructure. The company also raised its fourth-quarter and full-year guidance, prompting several Wall Street firms to lift their price targets on the stock.

For the quarter ending July 31, Keysight reported revenue of $1.85 billion, a 36.5% year-over-year increase, while adjusted earnings per share jumped roughly 79% to $3.07. Both metrics surpassed market forecasts. Orders climbed 56% year-over-year, and the company maintained a strong free cash flow profile. AI infrastructure emerged as a key growth catalyst during the quarter.

Analysts led by Joseph Cardoso at JPMorgan noted that Keysight's organic revenue expanded 31% year-over-year and 7% sequentially, clearly beating expectations. AI data center buildouts fueled rapid expansion in wired testing demand within the communications solutions segment, with the wired business now exceeding wireless for the first time. Concurrently, semiconductor capacity expansion, including investments in advanced nodes, high-bandwidth memory (HBM), and silicon photonics, alongside rising test needs for AI-related electronics, provided additional growth momentum in the electronic industrial solutions segment.

Driven by the robust demand environment, Keysight raised its outlook once again. For the fiscal fourth quarter, the company projects adjusted EPS of $3.34 to $3.40, well ahead of the $2.68 consensus, and revenue of $1.93 billion to $1.95 billion, also above the expected $1.83 billion. The full-year fiscal 2026 guidance was lifted as well.

Keysight President and CEO Satish Dhanasekaran attributed the record third-quarter results to broad-based growth across all major markets. Citing sustained momentum in orders, revenue, and profitability, the company decided to raise its fourth-quarter and full-year targets.

The strong earnings report drew an optimistic response from the Street. JPMorgan raised its price target on Keysight to $425 from $400, maintaining an "Overweight" rating. The firm highlighted that AI-driven growth continues unabated, with a growing backlog also underpinning the fiscal 2027 outlook. Morgan Stanley similarly lifted its target to $425 from $400, keeping an "Overweight" rating, citing AI-driven test demand, market share gains, and operating leverage as reinforcing its bullish stance. While supply capacity remains a near-term constraint, strong market demand and a solid pipeline are expected to support continued high growth into fiscal 2027.

Truist raised its price target to $400 from $376, holding a "Hold" rating, while Susquehanna increased its target to $440 from $425, maintaining a "Positive" rating—the highest on the Street. Susquehanna is particularly optimistic about AI's growth potential over the next several years, projecting AI-related revenue to climb from roughly 8% of Keysight's total revenue in fiscal 2025 to 20% in fiscal 2026 and further to 25% by fiscal 2028. Additionally, the company's broad coverage across the AI and wired communications supply chain is expanding its addressable revenue opportunity by three to four times. Meanwhile, a recovery in wireless capital expenditures and accelerated 6G R&D investments could provide further upside.

Overall, AI data center construction, advanced semiconductor capacity expansion, and new technology demand in areas like HBM and silicon photonics are significantly boosting the intensity of demand for test equipment and solutions. With AI-related revenue rapidly gaining share within the company's top line, Keysight is emerging as another major beneficiary of the AI infrastructure investment boom.