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VIAV's NSE Business Remains Robust: Time to Stay Bullish?
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Key Takeaways
VIAV's NSE segment revenues rose 54.4% year over year to $321.5 million in fiscal Q3.
Spirent assets expanded VIAV's AI networking exposure and may add a $200M annual revenue run rate.
Viavi Solutions sees healthy aerospace and defense demand, led by PNT solutions through 2026.
Viavi Solutions Inc. (VIAV - Free Report) is witnessing solid growth in the Network and Service Enablement (NSE) segment, backed by solid demand across multiple end markets. In the third quarter of fiscal 2026, the NSE segment generated $321.5 million in revenues, up 54.4% year over year. The segment accounted for 79% of total revenues.
The ongoing AI infrastructure buildout remains a major tailwind for the NSE segment. Increased demand from the data center ecosystem, including hyperscalers and semiconductor-driven infrastructure, is propelling revenues in the NSE segment. Management highlighted continued momentum across scale-up and scale-out architectures, driven by AI workloads and high-speed interconnect technologies. This demand is expected to persist throughout 2026, supporting sustained growth in lab, production and field-testing solutions.
It is also benefiting from its acquisition of Spirent's high-speed Ethernet, network security and channel emulation businesses. Integration of Spirent’s portfolio has increased the company's exposure to high-growth AI networking markets and strengthened its position in high-speed Ethernet testing. The acquisition is expected to contribute approximately $200 million in annual revenue run rate.
Aerospace and Defense remains another major contributor in the NSE segment. Solid demand for positioning, navigation and timing (PNT) solutions is driving growth. The company expects demand from aerospace and defense customers to remain healthy throughout calendar 2026. This provides an additional growth avenue beyond AI-related opportunities.
How Are Competitors Faring?
Keysight Technologies’ (KEYS - Free Report) Communications Solutions Group (CSG) is benefiting from strong demand across AI data centers, next-generation networking, aerospace & defense modernization, and emerging wireless technologies. In the second quarter of fiscal 2026, CSG revenues increased 35% year over year to $1.23 billion, while operating margin expanded 750 basis points to 33.4%. Keysight is seeing strong demand from Europe and the Americas for radar systems, electromagnetic spectrum operations, autonomous defense systems, space and satellite technologies. Keysight also expects strong momentum across AI data centers, defense technology, semiconductors and wireless markets to continue.
Teradyne, Inc. (TER - Free Report) designs, develops, manufactures and sells automated test equipment and robotics products. Teradyne’s AI-related demand accounted for nearly 70% of fiscal first-quarter revenues, up from about 60% in the fiscal fourth quarter, as customers increased investment across compute, networking, memory and power devices. Power semiconductor demand remains a multi-year opportunity for Teradyne as electrification progresses and as AI data center build-outs increase power management content.
Going by the price/earnings ratio, the company’s shares currently trade at 40.58 forward earnings, lower than 55.18 for the industry but above its mean of 35.8.
Image Source: Zacks Investment Research
The company’s earnings estimates for 2026 and 2027 have improved over the past 60 days.
View the Zacks #1 Rank List
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VIAV's NSE Business Remains Robust: Time to Stay Bullish?
Key Takeaways
Viavi Solutions Inc. (VIAV - Free Report) is witnessing solid growth in the Network and Service Enablement (NSE) segment, backed by solid demand across multiple end markets. In the third quarter of fiscal 2026, the NSE segment generated $321.5 million in revenues, up 54.4% year over year. The segment accounted for 79% of total revenues.
The ongoing AI infrastructure buildout remains a major tailwind for the NSE segment. Increased demand from the data center ecosystem, including hyperscalers and semiconductor-driven infrastructure, is propelling revenues in the NSE segment. Management highlighted continued momentum across scale-up and scale-out architectures, driven by AI workloads and high-speed interconnect technologies. This demand is expected to persist throughout 2026, supporting sustained growth in lab, production and field-testing solutions.
It is also benefiting from its acquisition of Spirent's high-speed Ethernet, network security and channel emulation businesses. Integration of Spirent’s portfolio has increased the company's exposure to high-growth AI networking markets and strengthened its position in high-speed Ethernet testing. The acquisition is expected to contribute approximately $200 million in annual revenue run rate.
Aerospace and Defense remains another major contributor in the NSE segment. Solid demand for positioning, navigation and timing (PNT) solutions is driving growth. The company expects demand from aerospace and defense customers to remain healthy throughout calendar 2026. This provides an additional growth avenue beyond AI-related opportunities.
How Are Competitors Faring?
Keysight Technologies’ (KEYS - Free Report) Communications Solutions Group (CSG) is benefiting from strong demand across AI data centers, next-generation networking, aerospace & defense modernization, and emerging wireless technologies. In the second quarter of fiscal 2026, CSG revenues increased 35% year over year to $1.23 billion, while operating margin expanded 750 basis points to 33.4%. Keysight is seeing strong demand from Europe and the Americas for radar systems, electromagnetic spectrum operations, autonomous defense systems, space and satellite technologies. Keysight also expects strong momentum across AI data centers, defense technology, semiconductors and wireless markets to continue.
Teradyne, Inc. (TER - Free Report) designs, develops, manufactures and sells automated test equipment and robotics products. Teradyne’s AI-related demand accounted for nearly 70% of fiscal first-quarter revenues, up from about 60% in the fiscal fourth quarter, as customers increased investment across compute, networking, memory and power devices. Power semiconductor demand remains a multi-year opportunity for Teradyne as electrification progresses and as AI data center build-outs increase power management content.
VIAV’s Price Performance, Valuation and Estimates
Viavi has gained 428.1% in the past year compared with the Electronics - Measuring Instruments industry’s growth of 369.5%.
Image Source: Zacks Investment Research
Going by the price/earnings ratio, the company’s shares currently trade at 40.58 forward earnings, lower than 55.18 for the industry but above its mean of 35.8.
Image Source: Zacks Investment Research
The company’s earnings estimates for 2026 and 2027 have improved over the past 60 days.
Image Source: Zacks Investment Research
VIAV carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.