Keysight Expects Higher Profits Due to Strong Data Center Demand

• Second-quarter revenue guidance of $1.69-$1.71 billion significantly exceeds analyst estimates of $1.51 billion
• Communications solutions unit revenue jumped 27% to $1.12 billion in Q1, driven by AI-focused data center infrastructure investments
• First-quarter revenue of $1.6 billion beat estimates of $1.54 billion, though outlook excludes potential impacts from Trump administration tariff actions

Keysight Technologies Beats Estimates on AI Data Center Demand

Key Developments:

Keysight Technologies reported first-quarter results for the period ended January 31 that exceeded Wall Street expectations, driven by robust data center demand supporting AI infrastructure expansion. The company's strong performance sent its stock higher.

Financial Performance:

• Q1 Revenue: $1.6 billion, beating estimates of $1.54 billion
• Q2 Revenue Guidance: $1.69-$1.71 billion, well above the $1.51 billion analyst consensus
• Q2 Profit Forecast: Above Wall Street estimates
• First-quarter adjusted earnings also exceeded expectations

Business Drivers:

The Santa Rosa, California-based electronic equipment maker benefited primarily from its Communications Solutions unit, which saw revenue surge 27% to $1.12 billion. Growth was fueled by:

• Continued investments in AI-focused data center infrastructure
• Non-terrestrial network applications
• Defense modernization programs

Company Profile:

Keysight provides electronic design, testing, and simulation software, positioning it as a key supplier to the expanding data center sector.

Risk Factors:

Management noted that its outlook excludes potential impacts from recent U.S. tariff developments, specifically President Trump's IEEPA-based tariffs that were struck down by courts on February 20, or any subsequent administration actions.

Market Implications:

Keysight's strong performance and optimistic guidance underscore continued robust spending on AI infrastructure by data center operators, suggesting sustained momentum in the AI buildout cycle. The company's results may signal positive trends for other suppliers in the semiconductor and electronics testing equipment sectors.