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$KEYS KEY READ-THROUGHS FROM KEYSIGHT TECHNOLOGIES FISCAL Q1 2026 EARNINGS CALL The material indicates a meaningful acceleration in high-speed digital, optical, and protocol-layer validation demand, with order strength and raised near-term guidance signaling that AI data center build-outs are expanding in both R&D and manufacturing phases simultaneously. The call also points to reinforcing tailwinds in semiconductor complexity (including high-bandwidth memory and silicon photonics) and a separate, structurally improving defense modernization cycle with increasing European participation. Against this constructive demand backdrop, the most actionable cross-market implications center on (1) an extended multi-node interconnect transition (800G to 1.6T with 3.2T already in active development), (2) expanding system-level emulation and “full-stack” validation requirements that raise test intensity per unit of deployed infrastructure, (3) accelerating HBM/AI capacity adds feeding through to semiconductor equipment and test, and (4) a material but currently unquantified policy uncertainty shock around tariffs that management explicitly excluded from guidance. Competitive positioning comments imply continued share pressure on narrower, product-centric test vendors as customers consolidate around integrated solution stacks. DATA CENTER AI INFRASTRUCTURE: R&D PLUS MANUFACTURING RAMPS SIGNAL A BROADER AND MORE DURABLE BUILD-OUT (READ-THROUGH 1) Support from transcript/source material: “Orders of $1.645 [billion] were up 30% on a reported basis and up 22% on a core basis.” “Wireline delivered record orders, surpassing wireless for the first time… broad-based across compute, memory, interconnect, and networking technologies.” “We sized our AI exposure last year… to be just about 10% of the company revenue… [AI orders] significantly above [the] company average… We’ve doubled the number of customers that represented that demand.” “Both R&D and manufacturing grew year-over-year.” Q2 guide: “revenue… $1,690 million to $1,710 million” and “earnings per share… $2.27 to $2.33,” with Bloomberg consensus deltas in the material indicating a large beat versus typical expectations. Affected companies (Company Name, Ticker - Country): NVIDIA, NVDA - US Broadcom, AVGO - US Marvell Technology, MRVL - US Arista Networks, ANET - US Super Micro Computer, SMCI - US Quanta Computer, 2382 - Taiwan Hon Hai Precision Industry (Foxconn), 2317 - Taiwan Wistron, 3231 - Taiwan Directional impact and magnitude: Direction: Positive Magnitude: High (near-term earnings and revenue momentum support; multi-quarter revision potential given manufacturing participation and order strength) Precise transmission mechanism: Keysight demand is a high-frequency proxy for the timing and intensity of design validation and production bring-up across AI clusters (compute, memory, interconnect, networking). Record wireline orders, explicit customer-base broadening, and commentary that both R&D and manufacturing grew indicate that the AI infrastructure cycle is not confined to early prototyping; it is also in scaled deployment, which mechanically increases unit volumes for server ODMs and switching/router ecosystems. A shift from a narrow set of early adopters to a broader customer set increases addressable unit count and lowers the probability of a single-customer digestion-driven air pocket, supporting sustained shipment velocity for AI-related silicon and systems vendors. Near-term trading catalysts: A near-term “demand surprise” factor is embedded in the material via the magnitude of Q2 guidance versus consensus figures shown, typically a catalyst for follow-through strength in AI infrastructure beneficiaries (networking, server ODMs, high-speed interconnect silicon) as the market reprices near-term shipment expectations. “Late-stage funnel is up high-double digits” and “timing of some bigger deals… shipping in Q2” suggests near-term shipment conversion that can support 1-2 quarter upside narratives for exposed suppliers. Longer-duration fundamental shifts: The explicit “full stack” validation framing and stated expansion in manufacturing-test demand imply structurally higher test intensity per deployed rack/cluster, which tends to coincide with higher integration complexity and faster interconnect cadence. This supports a longer-duration thesis of sustained AI infrastructure capex and refresh, not a single-node wave. HIGH-SPEED OPTICS AND ETHERNET AI NETWORKING: CONCURRENT 800G/1.6T/3.2T DEVELOPMENT EXTENDS THE OPTICAL TRANSCEIVER AND SWITCH SILICON CYCLE (READ-THROUGH 2) Support from transcript/source material: “AI workloads are driving rapid data center build-outs with 800 gig and 1.6 tera optics, alongside accelerated development of 3.2 tera.” “The move to Ethernet-based AI fabrics for better interoperability is creating more test opportunities.” “Arbitrary waveform generators and oscilloscopes are facilitating the move towards higher lane speeds such as 448 gig per lane to enable 3.2 tera speeds.” “Customers are designing architectures around co-packaged optics, optical circuit switching, and silicon photonics.” Affected companies (Company Name, Ticker - Country): Broadcom, AVGO - US Marvell Technology, MRVL - US Arista Networks, ANET - US Coherent, COHR - US Lumentum, LITE - US Fabrinet, FN - US Applied Optoelectronics, AAOI - US Directional impact and magnitude: Direction: Positive Magnitude: High for switch/optical silicon; Medium-High for optical components and module manufacturing (cycle extension and content growth, partially offset by competitive pricing risk in transceivers) Precise transmission mechanism: Concurrent development across multiple speed nodes increases the number of active design programs at any point in time, lifting aggregate demand for switch ASICs, retimers/DSPs, optical modules, and associated manufacturing capacity. Keysight’s explicit remarks that customers are simultaneously ramping 800G, accelerating 1.6T, and already planning 3.2T implies a longer “overlap window” rather than a clean substitution cycle, extending the duration of elevated component demand. The shift toward Ethernet-based AI fabrics increases interoperability requirements and expands the number of vendors participating in the ecosystem, which tends to broaden the installed base of Ethernet switching platforms and merchant silicon content in AI clusters, benefiting Ethernet-centric networking suppliers and the optical interconnect supply chain. Near-term trading catalysts: Acceleration signals around 1.6T and 800G production readiness can pull forward transceiver and switch silicon shipments and drive near-term estimate risk to the upside for exposed suppliers, particularly if procurement shifts from lab deployments into broader cluster rollouts. Longer-duration fundamental shifts: Architectural moves toward co-packaged optics and silicon photonics suggest a multi-year content expansion cycle for optical components, advanced packaging, and photonics-enabled interconnect. This can structurally increase the value of high-performance optical component franchises and specialized module manufacturing capacity, albeit with uneven timing given ecosystem maturity. SEMICONDUCTORS: HBM AND AI CAPACITY ADDS ARE ACCELERATING; MEMORY PRICING IS RISING, SUPPORTING MEMORY MAKERS BUT PRESSURING SYSTEM BOM COSTS (READ-THROUGH 3) Support from transcript/source material: “In our semiconductor business, the pace of investment accelerated. High-bandwidth memory and a broader AI-driven capacity expansion led to robust demand for our wafer-level test and characterization solutions.” “Silicon photonics programs and production timelines… are picking-up speed and intensity.” On supply chain: “On the margin, prices are going up on memories. We factored that into our outlook and guide…” Affected companies (Company Name, Ticker - Country): SK hynix, 000660 - South Korea Micron Technology, MU - US Samsung Electronics, 005930 - South Korea ASML Holding, ASML - Netherlands Applied Materials, AMAT - US Lam Research, LRCX - US Teradyne, TER - US Advantest, 6857 - Japan Dell Technologies, DELL - US Hewlett Packard Enterprise, HPE - US Directional impact and magnitude: Direction: Positive for memory makers and semiconductor capex/test; Negative for server OEM gross margin sensitivity to memory cost Magnitude: Medium-High (memory makers) / Medium (semi equipment/test) / Medium (server OEM margin risk if pricing does not fully offset component inflation) Precise transmission mechanism: “Robust demand” for wafer-level test and characterization tied explicitly to HBM and AI capacity expansion indicates that memory and logic manufacturers are investing and moving programs forward, which supports utilization, pricing power, and capex demand across the equipment stack. This is a direct positive read-through to both memory suppliers (higher pricing and volume opportunity) and semiconductor equipment/test vendors (capacity expansion and higher test intensity due to advanced nodes, HBM stacks, and photonics integration). Rising memory prices are a cost headwind for system OEMs and integrators with large memory content per unit; unless passed through via pricing, margin compression risk increases. This is particularly relevant in AI servers where HBM is a meaningful portion of system cost, and where competitive pricing in systems can limit pass-through. Near-term trading catalysts: Any corroboration of rising memory pricing and accelerated investment (as signaled here) tends to be a near-term catalyst for memory suppliers via upward ASP and margin expectations, and for select equipment names via improved order sentiment. Conversely, a cost-up environment can become a near-term narrative overhang for system OEM margin guidance, particularly during rapid volume ramps. Longer-duration fundamental shifts: HBM content per accelerator and increased packaging complexity create structurally higher test and metrology requirements, supporting a longer-duration tailwind for semiconductor test and process control ecosystems beyond a single quarter’s capex cadence. AEROSPACE, DEFENSE, AND GOVERNMENT: EUROPEAN DEFENSE SPEND AND U.S. CAPACITY ADDS POINT TO A MULTI-YEAR MODERNIZATION CYCLE (READ-THROUGH 4) Support from transcript/source material: “We saw record quarter one orders… driven by heightened global focus on deterrence and defense modernization priorities.” “We also saw a robust broad-based activity in Europe supported by rising defense budgets… we expect that to continue.” “US primes continue to… ramp radar production… We secured multiple wins… high-performance threat emulators…” “Our newly-acquired PNT portfolio had a solid quarter… test anti-jam and anti-spoof avionics in contested environments.” “The increase in global defense spending represents a structural tailwind to our aerospace and defense business…” Affected companies (Company Name, Ticker - Country): RTX, RTX - US Lockheed Martin, LMT - US Northrop Grumman, NOC - US L3Harris Technologies, LHX - US BAE Systems, BA - UK Thales, HO - France Rheinmetall, RHM - Germany Leonardo, LDO - Italy Saab, SAAB B - Sweden Directional impact and magnitude: Direction: Positive Magnitude: Medium-High (Europe-facing primes and electronic systems suppliers); Medium (broader U.S. primes, given already-elevated expectations in many cases) Precise transmission mechanism: Keysight order strength in ADG, combined with explicit references to radar production ramps, spectrum operations, and PNT resilience testing, implies increased program execution and production automation activity across defense electronics. This is typically downstream of budget authorization and program commitment, and upstream of sustained hardware deliveries, making it a useful read-through for defense primes’ electronic systems content and modernization backlogs. The emphasis on Europe (“robust broad-based activity”) suggests incremental acceleration outside the U.S., which can disproportionately benefit European primes and suppliers with direct exposure to regional procurement cycles and sovereignty-driven modernization programs. Near-term trading catalysts: Improved defense demand narratives and evidence of production ramp activity can catalyze near-term sentiment and multiple support for defense primes, particularly Europe-exposed names where incremental budget acceleration can be less fully priced. Longer-duration fundamental shifts: Structural modernization themes (contested EW environments, anti-jam/anti-spoof PNT, radar and space/satellite systems) imply sustained multiyear R&D and production cycles with recurring test and upgrade demand, supporting durable revenue streams across defense electronics ecosystems. WIRELESS, NTN, AND 6G: REAL STANDARDIZATION PROGRESS BUT MANAGEMENT SIGNALS LIMITED NEAR-TERM TAM VISIBILITY (READ-THROUGH 5) Support from transcript/source material: “We’re seeing a broadening of non-terrestrial network ecosystem as new LEOs and direct-to-cell services gain traction.” “This quarter, we achieved a live NR NTN connection with Samsung in a 3GPP-defined satellite frequency band…” “Early 6G R&D engagements expanded… solidifying our view of commercialization by 2030.” “We registered multiple wins for our newly-launched RaySim AI RAN offering…” “It’s a little bit too early to sort of size that as a TAM…” Affected companies (Company Name, Ticker - Country): Qualcomm, QCOM - US MediaTek, 2454 - Taiwan Ericsson, ERIC - Sweden Nokia, NOK - Finland Samsung Electronics, 005930 - South Korea AST SpaceMobile, ASTS - US Iridium Communications, IRDM - US Directional impact and magnitude: Direction: Positive long-duration optionality; Negative for near-term extrapolation risk in NTN/direct-to-cell narratives Magnitude: Low-Medium near-term; Medium longer-duration (particularly for modem/RAN ecosystems if 6G and NTN scale) Precise transmission mechanism: Demonstrated NTN connectivity and active 6G R&D engagements indicate that prototype and pre-commercial ecosystems are advancing, which supports sustained R&D spend in modems, RF front-end integration, satellite interoperability, and network software. This tends to be a leading indicator for future platform roadmaps at modem vendors and RAN suppliers. The explicit refusal to size TAM and the long-dated commercialization framework (2030) are a high-conviction constraint on near-term revenue expectations for NTN beneficiaries. Near-term valuation sensitivity is therefore more likely to be driven by milestone credibility and ecosystem traction rather than near-term unit economics. Near-term trading catalysts: Additional public milestone demonstrations, standards progress, and early ecosystem wins (similar to the Samsung NTN connection cited) can move sentiment in satellite connectivity and telecom R&D-adjacent names, but the near-term revenue contribution is likely limited without broader commercial deployment signals. Longer-duration fundamental shifts: Integration of terrestrial and non-terrestrial networks and AI-assisted RAN optimization (as implied by RaySim AI RAN wins) suggests a structural shift toward more software-defined and emulation-heavy network design and operations, benefitting vendors positioned in modem/RAN software ecosystems over multiple years. SIMULATION, EMULATION, AND SOFTWARE-HEAVY VALIDATION: SYSTEM-LEVEL “DIGITAL TWIN” SPEND IS INCREASING ACROSS AI NETWORKING AND INDUSTRIAL END MARKETS (READ-THROUGH 6) Support from transcript/source material: “System-level validation and benchmarking are becoming essential… workload emulation solutions… emulating real AI workload and stress conditions.” “RaySim AI RAN… emulation of real-world network environments to train AI models for network functions.” “Software and services accounted for approximately 40% of Keysight revenue, while annual recurring revenue was 29% of total mix.” “Healthy annual renewals in our ESI simulation portfolio… key wins with leading EV and robotaxi customers in software-defined vehicle-related manufacturing.” Affected companies (Company Name, Ticker - Country): Cadence Design Systems, CDNS - US Synopsys, SNPS - US Siemens, SIE - Germany Dassault Systèmes, DSY - France PTC, PTC - US Rockwell Automation, ROK - US Directional impact and magnitude: Direction: Positive Magnitude: Medium (broad-based but uneven timing; strongest where emulation/simulation is tied to mission-critical deployment risk reduction) Precise transmission mechanism: As AI clusters and next-gen networks scale, performance and reliability risks shift from component-level correctness to system-level behavior under real workload stress. This drives incremental spend on emulation, simulation, and integrated software workflows to compress design cycles and reduce deployment risk. The same pattern extends into industrial/automotive workflows (software-defined vehicle manufacturing and high-fidelity simulation renewals). Higher system complexity increases the economic value of tools that can simulate and validate end-to-end behavior, supporting subscription renewals, seat expansion, and higher attach rates for simulation and digital twin offerings in both semiconductor/network design and industrial automation ecosystems. Near-term trading catalysts: Evidence of rising attach rates, renewal strength, and enterprise adoption of emulation-heavy workflows can support near-term multiple resilience for simulation-heavy software franchises, particularly if framed as cost-saving and time-to-market enabling rather than discretionary IT spend. Longer-duration fundamental shifts: A structural move toward “full-stack” validation and AI-assisted modeling suggests durable growth in high-fidelity simulation and emulation toolchains, with expanding TAM as validation shifts earlier in the lifecycle and broadens beyond core design teams into manufacturing and operations. TEST AND MEASUREMENT COMPETITION: INTEGRATED SOLUTION STACKS IN AI AND NETWORKING ARE LIKELY TO PRESSURE NICHE TEST VENDORS (READ-THROUGH 7) Support from transcript/source material: “Keysight’s competitive advantage is that we are designed to be a solutions-oriented company… [with] our own in-house tech stack…” “Our full stack portfolio across electrical, optical, RF, and network protocol technologies enables… end-to-end validation from early design through deployment.” “We work hard to make sure our customers and the ecosystem are supported… as our new products come out… [with] the ability to grow our gross margins.” Acquisitions called out as raising software mix and expanding capability: “Together those acquisitions… added about 3 points to the overall software mix…” Affected companies (Company Name, Ticker - Country): Viavi Solutions, VIAV - US Anritsu, 6754 - Japan Fortive, FTV - US Directional impact and magnitude: Direction: Negative Magnitude: Medium for more directly overlapping, communications-test-focused vendors; Low-Medium for diversified instrument conglomerates Precise transmission mechanism: Customer buying behavior in fast-moving AI networking and system validation tends to favor integrated workflows and vendor consolidation to reduce integration risk and accelerate deployment timelines. A “full stack” offering that spans physical layer measurement through protocol validation and workload emulation increases the probability of budget consolidation into fewer vendors, pressuring competitors that are narrower in scope or more product-centric. If Keysight’s commentary reflects broader purchasing trends, peers may face heightened competitive intensity, slower growth in overlapping categories, or incremental pricing pressure as solutions-based bundling becomes more prevalent. Near-term trading catalysts: Any peer guidance that flags share loss, pricing pressure, or weaker demand in high-speed interconnect/network validation categories would reinforce this read-through and can create near-term relative underperformance. Longer-duration fundamental shifts: Continued integration of software, emulation, and hardware test into unified platforms suggests a structural advantage for vendors with end-to-end solution stacks, implying a multi-year competitive headwind for narrower portfolios unless they reposition via M&A or accelerated platform expansion. TRADE POLICY AND TARIFF UNCERTAINTY: GUIDANCE EXCLUDES POTENTIAL IMPACTS, RAISING NEAR-TERM EARNINGS VARIABILITY RISK ACROSS HARDWARE SUPPLY CHAINS (READ-THROUGH 8) Support from transcript/source material: “Today’s guidance does not contemplate any impact from the recently announced Supreme Court decision regarding tariffs, which we are still assessing.” Affected companies (Company Name, Ticker - Country): Apple, AAPL - US Cisco Systems, CSCO - US Arista Networks, ANET - US Dell Technologies, DELL - US HP, HPQ - US Jabil, JBL - US Flex, FLEX - US Hon Hai Precision Industry (Foxconn), 2317 - Taiwan Directional impact and magnitude: Direction: Negative (uncertainty-driven risk premium and potential margin variability) Magnitude: Medium (directionally negative for near-term sentiment; eventual fundamental impact depends on the ultimate tariff regime and mitigation success) Precise transmission mechanism: Explicit exclusion of tariff impacts from guidance indicates that cost and compliance outcomes are not yet measurable enough to be embedded in near-term outlooks. This raises the probability of earnings variance driven by input cost swings, supply chain rerouting costs, lead-time disruptions, or delayed customer purchasing decisions while pricing pass-through and mitigation actions are recalibrated. For hardware ecosystems with global manufacturing footprints, tariff uncertainty can change landed cost assumptions, alter sourcing decisions, and increase the likelihood of conservative guidance postures, which typically widens valuation dispersion and increases event-driven volatility. Near-term trading catalysts: Any subsequent corporate disclosures across the electronics and industrial hardware complex that quantify tariff impacts or mitigation timelines can trigger rapid repricing, particularly for companies with high import content and limited pricing flexibility. Longer-duration fundamental shifts: Persistent trade-policy instability tends to accelerate supply-chain regionalization and dual-sourcing strategies, benefiting select contract manufacturers and component suppliers with flexible geographic footprints, while structurally raising operating complexity and compliance cost for globally integrated hardware companies.