Viavi, Solutions, Inc. VIAV shares have skyrocketed 167.9% year to date compared with the industry’s growth of 150.2%. The stock has outperformed the Zacks Computer & Technology sector and the S&P 500 during the same time frame.
The company has outperformed its peers like Keysight Technologies, Inc. KEYS, and Ciena Corporation CIEN. Shares of Keysight have jumped 72.3% and shares of Ciena have risen 109.7%.
VIAV Rides on Strength in AI Infrastructure Vertical
Viavi is witnessing solid traction in its Network and Service Enablement, backed by ongoing AI infrastructure buildout. Growing demand from the data center ecosystem, including hyperscalers and semiconductor-driven infrastructure, is driving revenues in the NSE segment.
The company recently launched the industry's first Ultra Ethernet Transport validation solution for AI fabrics. The platform enables hyperscalers, cloud providers and network equipment vendors to verify AI networks with costly GPU infrastructure. The innovation boost Viavi’s prospects across multiple use cases, such as validation of large language model traffic, congestion control and AI workload emulation and several others.
Viavi recently introduced AI Experts, an AI-driven software layer integrated into its testing platforms. Its capabilities include automated configuration, diagnostics assistance, workflow automation, real-time troubleshooting and faster wireless validation. This shows that VIAV is moving towards intelligent software-enabled testing instead of simply selling hardware. This can improve customers’ brand loyalty and boost software revenues over time. The company also recently secured PCIe 6.0 Certification. The certification enhances VIAVI's credibility as a trusted provider of compliance and validation solutions for advanced computing technologies.
One of the largest contributors to growth is the acquisition of Spirent's high-speed Ethernet, network security and channel emulation businesses. Following the buyout, the company benefited from a broader customer base, an Ethernet testing portfolio expansion, stronger AI networking capabilities and increased cross-selling opportunities. A diverse portfolio, innovation initiatives are boosting its competitive edge against its peers such as Keysight, Ciena and Teradyne.
Strong Operating Margin Growth is a Positive
Strong margin expansion shows improving operating leverage. Revenue grew 42.8% year over year, while non-GAAP operating income grew 79.2% during the same time period. Non-GAAP operating margin improved to 21% in the third quarter of fiscal 2026, up from 16.7% in the year-ago quarter. This reflects higher volumes and a favorable product mix within Network and Service Enablement. Segment profitability benefited from acquisition synergies and stronger demand across data center and aerospace markets. Fourth quarter fiscal 2026 outlook indicates additional operating margin expansion, signaling continued operating leverage as revenues scale and a greater portion of sales comes from differentiated testing and software-oriented offerings.
Estimate Revision Trend
The company’s earnings estimates for 2026 has remained unchanged and for 2027 it has improved over the past 60 days.
Key Valuation Metric of VIAV
From a valuation standpoint, VIAV is currently trading at a discount compared to the industry. Going by the price/earnings ratio, the company’s shares currently trade at 51.16 forward 12-month earnings, lower than 58.46 for the industry.
End Note
Viavi is positioning itself as a critical supplier to AI networking infrastructure. Strong demand from data centers, continued 5G and fiber network upgrades, and steady aerospace and defense demand are expected to be major growth drivers for the upcoming quarters. Portfolio expansion through strategic acquisition and a strong focus on innovation is a positive factor. Hence, with a Zacks rank #2 (Buy), Viavi appears to be a good investment option at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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