Keysight: The AI and Defense Stock Seeing Big Price Target Boosts

Key Points

• Keysight Technologies is putting up big-time gains, with shares more than doubling since the start of 2025.
• The firm plays in two of the economy's top growth areas: artificial intelligence and defense.
• After beating and raising during its latest quarter, analysts lifted their Keysight price targets substantially.

Keysight Technologies NYSE: KEYS is a company sitting in the middle of two big economic trends: the artificial intelligence (AI) buildout and defense modernization.

With these forces behind it, Keysight shares have performed very well over the recent past. Since the start of 2025, the stock is up more than 100%, and in 2026, shares have gained about 70%.

Keysight spiked 23% following its February earnings report, leading the stock to near $300 per share. Since then, Keysight has continued to climb, now trading closer to $350. Keysight just released its fiscal Q2 earnings, and the results were the best the company has ever seen. Although the stock did not receive a big boost from markets, the opposite was true for Wall Street price targets. After the report, analysts issued big-time price target increases, signaling support for the continuation of Keysight’s impressive run.

Keysight Wallops Adjusted EPS Estimates, Issues Large Guidance Raise

In its report, Keysight posted revenue of $1.72 billion, or an increase of just over 31% year-over-year (YOY). (Note that Keysight reports its fiscal results slightly ahead of the calendar year.) This marked Keysight’s fastest revenue growth rate in five years since the company saw sales rise by 36% YOY in early 2021. Keysight’s revenue very slightly beat estimates of $1.71 billion.

The much larger beat came on the bottom line. Keysight saw its adjusted earnings per share (EPS) rise by a massive 69% YOY to $2.87. Meanwhile, analysts had forecasted a figure of $2.32, implying growth of only 36% YOY. Still, it is important to note that a $96 million tariff refund benefited adjusted EPS significantly. Without this benefit, the company still would have beat, but by a much smaller margin. The tariff refund still benefits Keystone, but it is a factor outside the firm’s control.

Orders grew even more impressively than sales, rising by 56% YOY to more than $2 billion—a strong sign for the company’s growth outlook. Considering these results, Keysight increased its full-year fiscal 2026 guidance, expecting revenue growth in the high 20% range. This is a significant boost over prior expectations of “growth just above 20%.”

Strength was broad-based across Keysight’s end markets. Commercial Communications, which houses much of its data center and AI-related revenue, rose 40% YOY. This was a solid acceleration over 33% YOY growth in the prior quarter. Meanwhile, Aerospace, Defense & Government saw sales rise 24% YOY, up from 18% YOY last quarter. Electronic Industrial Solutions, which houses some semiconductor revenue, rose 24% YOY, a nice move up compared to 15% growth last quarter.

Keysight Shares Didn’t Budge, But Price Targets Moved Way Up

Despite its very strong earnings, Keysight shares were nearly unchanged afterward, falling 0.6%. This likely reflects the fact that the tariff benefit contributed significantly to its adjusted EPS beat. Furthermore, shares had risen 14% since the company’s last post-earnings spike, indicating that investors had already priced in Keysight’s record results.

Nonetheless, after Keysight’s report, Wall Street analysts drastically upped their forecasts on the stock. Overall, among analysts for whom MarketBeat had previous price target data, the average price target moved up by a hefty 15% to $391. This figure sits notably higher than the MarketBeat consensus price target of $372. Using this updated average price target, the implied upside in Keysight stock is close to 10%.

10% upside isn’t something to write home about. However, the more important thing to note is that Keysight is consistently exceeding analysts' expectations. The firm has exceeded estimates on both sales and adjusted EPS in 11 out of its last 12 reports.

With this, Wall Street forecasters have had little choice but to move their targets higher as Keysight shows its business is firing on all cylinders. When a stock performs very well, analysts often have to play catch-up, and implied upside figures don’t necessarily tell the whole story.

Keysight: Strong Fundamental Improvement Versus Elevated Valuation

Keysight currently trades at a forward price-to-earnings (P/E) ratio near 43x. This is significantly higher than its average forward P/E of 23x over the past three years. While this metric is clearly elevated compared to history, it is also difficult to argue with the results Keysight is putting up. The firm is growing at a rate not seen in years, and profits are rising rapidly even without the tariff benefit. Given the strong underlying tailwinds in AI and defense supporting Keysight’s growth, it would not be overly surprising to see the stock continue to perform.