Keysight Technologies (NYSE: KEYS ) isn’t the company you mostly hear about among the AI buzzing names, but the stock, which is up 54% so far this year, just got a big vote of confidence from Morgan Stanley. The brokerage upgraded the company to Overweight from Equal Weight and raised its price target to $400 from $350. That target points to an upside of about 25% from today’s stock price of $319.
Why is Morgan Stanley so bullish? It sees Keysight as a play on AI investment and broadening architectures. That means it believes the company makes money regardless of which company’s chips or network designs end up winning in the AI race.
KEYS is a classic pick-and-shovel play. It provides electronic design and test solutions, including software, instrumentation, and systems used in designing, simulating, validating, manufacturing, and optimizing communication systems and electronic equipment across industries like automotive, semiconductors, wireless, and data centers.
Why is Keysight a Good AI Stock to Buy For Long-Term Investors?
The reason Morgan Stanley gives for its bullish take on KEYS is simple. Customers are quickly adopting 800G, a networking speed standard that controls how fast data moves between servers. They’re also speeding up development of 1.6T, exactly double that speed, and already planning for 3.2T, double again after that. Keysight doesn’t make 800G, 1.6T, or 3.2T equipment itself. It makes the testing and measurement tools that chipmakers and network equipment makers use to check that their new gear actually works at these speeds before it ships.
Wall Street Taking Note
The company is benefiting immensely from AI. Its first-half fiscal 2026 AI-related revenue already exceeded the entirety of fiscal 2025. Morgan Stanley isn’t the only firm to spot the potential. A Truist analyst recently pointed out that the company has doubled its AI customer base year over year. Susquehanna increased its price target to $425 from $415 and kept its Positive rating on the stock.
The Bear Case and Risks for Keysight Technologies (NYSE: KEYS )
Bears point to two main concerns. First, an AI hype premium, the worry that Keysight’s stock gains are driven more by its AI data center association than by underlying fundamentals. Any slowdown in this hype would impact KEYS. The second risk is related to valuation concerns, with consensus estimates projecting a 12.72% compound annual growth rate in revenue from fiscal 2026 through fiscal 2030, well below what the current stock price appears to assume.
Over the past year, the stock is up about 100%.
While we acknowledge the risk and potential of KEYS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than KEYS and that has 10,000% upside potential, check out our report about the cheapest AI stock.
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