Keysight’s 3.04% Drop Amid Record Trading Volume as AI Gains Clash with Tariff Woes

Keysight Technologies (KEYS) fell 3.04% on August 20, 2025, with a trading volume of $0.41 billion, a 60.61% increase from the previous day. The company reported Q3 2025 revenue of $1.4 billion, up 11% year-over-year, driven by growth in Communications Solutions Group (CSG) and Electronic Industrial Solutions Group (EISG) segments. Earnings per share (EPS) reached $1.72, exceeding guidance, with a gross margin of 64% and operating margin of 25%.

Positive momentum came from AI adoption and strong demand in aerospace, defense, and general electronics. The company highlighted strategic investments in AI-related partnerships, such as PCIe Gen 6 validation with AMD, and a $50 million share repurchase program. Order growth accelerated to 7% year-over-year, with CEO Satish Dhanasekaran noting improved market conditions despite macroeconomic and tariff pressures. However, challenges persist in the semiconductor sector and potential delays in 6G commercialization.

Keysight faces headwinds from escalating tariffs, which could add $75 million in annual costs. Mitigation strategies include supply chain optimization and price adjustments, with full impact expected by mid-2026. The company raised full-year revenue guidance to $1.37–$1.39 billion for Q4 and affirmed a 5–7% long-term top-line growth target. CFO Neil Dougherty emphasized progress in addressing tariff impacts but cautioned about ongoing geopolitical uncertainties.

The backtest of a strategy buying the top 500 stocks by daily trading volume and holding for one day from 2022 to 2025 yielded a 0.98% average daily return and 31.52% total return over 365 days. This reflects short-term momentum capture but underscores market volatility and timing risks inherent in such approaches.