Keysight Technologies (KEYS) is set to benefit from the surge in AI infrastructure spending due to its architecture-agnostic exposure, Morgan Stanley said in a Monday note.

The increase of different designs in AI architecture raises the test intensity and widens the number of customer programs that Keysight can serve, Morgan Stanley analysts said, noting that the company has more than 50% of its revenue come from research and development as well as lab use cases.

Keysight offers lower volatility compared to other firms in the AI space, as its growth is not limited to AI, serving other sectors such as aerospace & defense, semiconductor test, and wireless communications, according to the note. Each end market carries its own multi-year investment case, the analysts said.

Further, the positive impact of AI tailwinds appears underappreciated, as AI revenue has grown to an estimated mid-teens percentage of revenue in H1 from around 10% at the end of 2025, the firm noted. The company's customer base is also expanding across R&D and manufacturing, the analysts added.

Morgan Stanley upgraded the company's stock rating to overweight from equal-weight and raised the price target to $400 from $350.

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