Keysight Technologies, Inc. KEYS

Keysight is significantly benefiting from AI infrastructure build-outs and rapid technology stack upgrades, which are driving greater design, emulation, and test intensity. This includes demand for solutions across compute, networking, interconnect, memory, and power. Optical speed refresh cycles are accelerating from 400G to 800G and 1.6T, with Keysight collaborating with industry leaders like Broadcom to validate next-gen 1.6-terabit networking silicon and custom AI accelerators. The company's portfolio, including silicon photonic solutions and AI emulation from Ixia technologies, is making meaningful contributions to the entire AI ecosystem.

Keysight advanced its software-centric solution strategy with the acquisitions of Spirent, Synopsys Optical Solutions Group, and Ansys Power Artist in Q4 FY25. These acquisitions bring new talent, technology, and expanded customer value. Spirent's precision location simulators enhance offerings in nonterrestrial networks and aerospace/defense, while the Optical Solutions Group expands the photonics portfolio for industrial and automotive applications. Power Artist adds to design solutions, collectively broadening Keysight's reach and capabilities across its markets.

Wireless orders and revenue grew high single digits for the full year, outperforming expectations due to steady 5G demand (Releases 18 and 19) and momentum in nonterrestrial networks (NTN) and early 6G research. Keysight is engaged with industry leaders to advance direct-to-cell connectivity and new LEO designs. In 6G, the industry is transitioning from pure research to pre-standards designs, with Keysight doubling its collaborations over the past year on applications like channel sounding, network modeling using digital twins, and advanced MIMO antenna design.

The Electronic Industrial Solutions Group (EISG) saw solid order and revenue growth in Q4 and for the full year. The semiconductor business was driven by steady demand for wafer test and lithography solutions, supporting AI-driven capacity expansion for leading-edge nodes, high-bandwidth memory, and silicon photonics. General electronics orders grew for the fifth consecutive quarter, up high single digits in Q4 and double digits for the full year, fueled by strength in the broad electronics supply chain, digital health, and education.

Keysight generated a record $1.3 billion in free cash flow in fiscal year 2025, demonstrating the strength of its operating model. The company deployed $1.7 billion for acquisitions in Q4 and repurchased $375 million in shares for the full year, representing approximately 30% of free cash flow. Since the start of 2023, Keysight has repurchased over $1.5 billion of shares, or 45% of free cash flow. The Board authorized an additional $1.5 billion share repurchase program, reinforcing its commitment to capital return.

Keysight has successfully mitigated the impact of tariffs implemented in April and expects to fully mitigate the August tariff increase in Q1 FY26, one quarter earlier than previously communicated. This acceleration is attributed to strong business performance, effective pricing strategies, and surcharging mitigations. Furthermore, the company anticipates realizing over $100 million in run-rate synergies and operational efficiencies from its recent acquisitions, primarily through integration efforts and system alignment, which will contribute to improved profitability over the next 12-18 months.