Keysight’s Q3 Earnings Preview: What to Watch Tonight

That wraps up our initial coverage of Keysight Technologies’ Q3 results. Thank you for stopping by!

Management expects fourth-quarter revenue of $1.93-$1.95 billion, representing 37% year-over-year growth at the midpoint and easily crushing analysts’ previous estimates of $1.81 billion.

This might explain why KEYS stock is now up 4% after earnings, after initially trading flat.

Adjusted earnings guidance of $3.34 to $3.40 per share also came in far above the $2.70 consensus. Keysight has the financial capacity to support that expansion, generating $403 million in third-quarter free cash flow, up 38.5% year over year.

Cash and restricted cash ended the quarter at $2.62 billion, even after the company spent $520 million on share repurchases during the first nine months of fiscal 2026.

Keysight’s Communications Solutions Group remained the primary growth engine, with revenue climbing 43% to $1.35 billion.

Commercial communications revenue grew 56% to $1.01 billion, while aerospace, defense, and government sales increased 14% to $339 million.

The growth also carried significant operating leverage, with the Communications segment’s gross margin expanding from 67% to 71%, while its operating margin jumped from 26% to 34%.

That combination of rapid growth and widening margins helps explain why Keysight’s earnings beat was substantially larger than its revenue beat.

Keysight’s orders reached $2.09 billion, up 56% from $1.34 billion last year and surpassing $2 billion for the second consecutive quarter.

Revenue rose 36.5% to $1.85 billion, while non-GAAP earnings jumped 78.5% to $3.07 per share. The order growth is especially important because it suggests Keysight’s recent acceleration is not simply clearing existing backlog.

Demand continues to build as AI infrastructure and other advanced computing projects require more sophisticated design, emulation, and testing equipment.

Keysight Technologies just reported fiscal third-quarter earnings, with shares initially down 1% despite beating expectations across the board. Here are the key numbers:

• Revenue: $1.846 billion vs. $1.737 billion expected
• Adjusted EPS: $3.07 vs. $2.48 expected

The company also issued fiscal fourth-quarter guidance well ahead of Wall Street’s forecasts:

• Q4 revenue guidance: $1.930 billion to $1.950 billion vs. $1.814 billion expected
• Q4 adjusted EPS guidance: $3.34 to $3.40 vs. $2.70 expected

Keysight delivered a decisive double beat, with adjusted earnings topping consensus by nearly 24% and revenue exceeding estimates by more than 6%.

Its fourth-quarter outlook was even stronger, suggesting continued momentum across the test-and-measurement business.

With shares down 6.43% today heading into tonight’s earnings report, here are some top factors to watch:

Top 5 Analyst Questions:

1. Is the $500-$600 million AI business tracking to double again in H2?
2. Did book-to-bill hold above 1.0x?
3. How durable are Q2’s 59% incremental margins?
4. Any tariff residual after the $97 million Q2 cost benefit?
5. Update on the $375M acquisition contribution?

Key Topics, Buzzwords, and Red Flags:

• Management must address: Q4 sequential ramp, CSG margin trajectory, capex at $200M, and the 6G/NTN pipeline.
• Buzzwords: “order momentum,” “raising outlook,” “1.6-terabit,” “operating leverage,” “pipeline velocity.”
• Red flags: hedged AI capex commentary, CSG margin slippage from 33%, wireline order deceleration, or any FY26 guide trim.

Keysight Technologies (NYSE:KEYS) trades at $337.91, down about 6.3% today after last week’s 7.67% rally. Shares are still up 77.74% year to date and 121.02% over one year, with analysts holding a $388.33 average target.

Options Positioning

The full-chain put/call ratio sits at 0.36, but the Aug 21 weekly flipped defensive with 1,065 calls versus 1,431 puts as traders hedge tonight’s release.

What Moves the Stock

Historical earnings-day reactions have averaged 7.36%, ranging from -3.04% to +23.05%. Consensus tracks the guided $2.43 to $2.49 EPS on $1.730 billion to $1.750 billion revenue.

Stronger Q4 guidance plus a book-to-bill ratio above 1.0x could reverse today’s slide, while soft AI orders or cautious tariff commentary could likely extend the drop.

Why Tonight’s Guidance Matters More Than the Earnings Report

Keysight (NYSE:KEYS)’s Q3 results are largely spoken for. Management guided revenue of $1.730 billion to $1.750 billion and EPS of $2.43 to $2.49, and the team has beaten every quarter in the last four reports with a 100% beat rate. The real swing factor will be the company’s Q4 outlook.

Bullish vs. Bearish Scenarios

• Bullish: Q4 revenue guide above ~$1.78B, EPS above $2.55, a third full-year FY26 raise, and book-to-bill holding above 1.0x.
• Bearish: Q4 revenue below $1.70B, EPS below $2.40, softer AI data center commentary, or cautious tariff language.

Investors will also parse orders, CSG growth, and any color on the $500-$600 million AI business trajectory.

Keysight Technologies reports fiscal third-quarter earnings at 4:05 PM ET after the closing bell today, with guidance pointing to roughly 29% year-over-year revenue growth at the midpoint.

The company enters the report with significant momentum after generating more AI-related revenue during the first half of fiscal 2026 than it did throughout all of 2025.

Management has sized Keysight’s AI infrastructure business at about $500-$600 million, with demand benefiting from the massive buildout in data centers, networking and advanced computing. This increasingly positions Keysight as an indirect way to invest in rising hyperscaler capital spending.

However, much of that optimism may already be reflected in the stock. Keysight has soared 65% year to date and nearly 7% in the past month.

Wall Street remains bullish, with 10 Buy ratings and an average price target of $388.33, but that also raises the bar for tonight’s results. A clean beat paired with stronger fourth-quarter guidance would reinforce the multi-year AI infrastructure thesis.