KEYS Rides on Strength in the EISG Segment: More Upside Ahead?

Keysight Technologies, Inc. KEYS is benefiting from solid momentum in the Electronic Industrial Solutions Group (EISG). The segment’s revenues increased to $501 million, up 21% year over year. There are multiple factors driving this growth.

AI-related innovation and infrastructure investment are major growth drivers for EISG's General Electronics business. The expansion of next-generation computing is increasing testing requirements for components such as multilayer PCBs and capacitors. This is driving demand for Keysight's precision measurement solutions. The semiconductor business is benefiting from continued capacity expansion in advanced process nodes, high-bandwidth memory and silicon photonics.

Automakers are also facing increasing requirements around in-vehicle networking and cybersecurity. Growing investment in software-defined vehicle architectures is supporting demand for Keysight's testing solutions in the automotive vertical. EISG is also seeing growth from the broader energy transition. Keysight is witnessing higher customer engagement across multiple use cases such as high-power charging, energy storage, compliance and infrastructure validation.

Digital health is providing another diversification opportunity for the General Electronics vertical in the EISG segment. The company reported double-digit growth in digital health, backed by growing adoption of wearable devices and monitoring systems. EISG prospects remain positive for upcoming quarters, backed by continued investment in AI infrastructure, advanced semiconductors, silicon photonics and next-generation automotive technologies.

How are Competitors Faring?

The company faces competition from Fortive Corporation FTV and Teradyne, Inc. TER in this segment. In the second quarter, Fortive’s Intelligent Operating Solutions segment, which includes instrumentation businesses, grew 8.8% reported and 7.4% on a core basis, supported by professional instrumentation demand. The company is actively venturing into higher-growth verticals such as data centers, defense and distributed energy to boost its growth prospects.

Teradyne designs, develops, manufactures and sells automated test equipment and robotics products. Its automatic test systems are used to test semiconductors, wireless products, data storage and complex electronics systems in consumer electronics, wireless, automotive, industrial, computing, communications, and aerospace and defense industries. Teradyne’s AI-driven revenues exceeded 60% of second-quarter sales as total revenues reached a second consecutive record of $1.33 billion.

KEYS’ Price Performance, Valuation and Estimates

Keysight has gained 98.9% in the past year compared with the Electronics - Measuring Instruments industry’s growth of 115.1%.

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Going by the price/earnings ratio, the company’s shares currently trade at 27.1 forward earnings, lower than 33.24 for the industry and its mean of 30.36.

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The company’s earnings estimates for 2026 and 2027 have improved over the past 60 days.

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KEYS carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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