VIAV's NSE Segment Shows Strength: Is the Growth Story Intact?
VIAVI Solutions Inc. VIAV is seeing strong momentum in its Network and Service Enablement (NSE) business. During the fourth quarter, NSE’s Segment revenues reached $353.9 million, up 69.2% year over year, exceeding the company's guidance range of $340-$348 million. There are several factors driving this uptick.
The data center ecosystem is now a contributor to VIAVI's NSE business growth. The company is witnessing demand from semiconductor companies, optical module manufacturers, network equipment manufacturers and hyperscalers. Companies in this sector are rapidly adopting testing solutions across research and development, production, deployment, maintenance and network monitoring. Migration toward higher-speed networking is another major contributor. 800G remains the largest volume driver currently. The ramp of 1.6-terabit technology is expected to be another growth driver in upcoming quarters.
The integration of selected Spirent product lines is another tailwind for NSE. The acquisition strengthens VIAVI's portfolio in high-speed Ethernet and expands its capabilities in network validation and security testing. VIAVI is also developing products for next-generation AI networks. In June 2026, the company introduced an Ultra Ethernet Transport validation solution for AI fabrics. The platform is designed for hyperscalers, cloud providers, neocloud operators and network equipment manufacturers. Such leading-edge innovation expands Viavi’s addressable market beyond conventional telecom testing.
Management expects another strong performance in the first quarter of 2027 in the NSE segment. It expects NSE revenues of $360-$368 million compared with $353.9 million in the fiscal fourth quarter. NSE operating margin is expected at 23.1%, plus or minus 50 basis points.
Despite strong growth prospects, investors should also consider certain risk factors. Traditional wireless testing demand remains soft. Heavy reliance on continued data center investment and potential fluctuations in customer spending can create volatility in the NSE segment.
How Are Key Test-and-Measurement Peers Faring?
Keysight Technologies’ KEYS CSG generated $1.35 billion in revenues, up from the year-ago quarter’s $940 million. The 43% year-over-year increase was driven by strong performance in wireline and wireless, as well as continued momentum in AI infrastructure and aerospace, defense and government. Emerging 6G and non-terrestrial network opportunities also supported demand. Keysight’s portfolio across design, emulation and test positions it to capture ongoing wireless and network investment cycles. In the third quarter of fiscal 2026, wireless orders grew again as customers increased spending on next-generation connectivity and the supply chain supporting AI infrastructure.
Teradyne, Inc. TER is a provider of automated test equipment and robotics, with its operations spanning Semiconductor Test, Product Test and Robotics. Its testing portfolio covers semiconductors, wireless products, silicon photonics and complex electronics. Teradyne is also benefiting from the rise in AI-related semiconductor demand. In the second quarter of 2026, revenues reached a record $1.33 billion, up 104% year over year, with Semiconductor Test contributing $1.12 billion, Product Test $107 million and Robotics $100 million.
VIAV’s Price Performance, Valuation and Estimates
Viavi has gained 196% in the past year compared with the Electronics - Measuring Instruments industry’s growth of 146.9%.
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Going by the price/earnings ratio, the company’s shares currently trade at 22.82 forward earnings, lower than 35.95 for the industry and lower than its mean of 39.43.
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The company’s earnings estimates for 2026 and 2027 have improved over the past 60 days.
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VIAV sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
