Viavi Solutions: Riding the 5G and AI Wave into the Russell 2000 Growth Index

Viavi Solutions (VIAV) is poised to capture a dual tailwind: its June 30, 2025, inclusion in the Russell 3000E Growth Index—a move expected to drive passive fund inflows—and its strategic positioning in the secular growth of 5G and AI infrastructure. This confluence of factors could make the company a compelling investment play for those betting on the next phase of digital transformation.

The Russell 3000E Inclusion: A Catalyst for Liquidity and Attention

Viavi's addition to the Russell 3000E Growth Index on June 30, 2025, marks a critical inflection point. Historically, such reconstitutions trigger billions in passive fund flows as index-tracking ETFs and mutual funds rebalance their portfolios. In 2024, reconstitution-driven flows exceeded $220 billion, with newly added stocks often experiencing short-term price pops as funds scramble to meet benchmark requirements. will likely be a key metric to monitor in the coming months, as institutional buying could amplify near-term volatility and valuation momentum.

A Strong Q3 2025 Report Reinforces Growth Narrative

Viavi's fiscal third-quarter 2025 results, released on May 1, 2025, underscore its strategic execution. Revenue surged 15.8% year-over-year to $284.8 million, driven by its dominant Network Enablement (NE) segment, which grew 23.9% to $188.0 million. This segment's focus on fiber-optic test solutions for 800G and 1.6Tb networks—critical for 5G and hyperscale data centers—has positioned Viavi at the forefront of infrastructure upgrades. Non-GAAP operating margins expanded to 16.7%, reflecting operational efficiency gains.

The company's Inertial Labs acquisition in January 2025 further strengthens its AI adjacency, adding inertial measurement unit (IMU) technology used in autonomous systems and satellite networks. While the deal's impact on Q3 results remains unquantified, it aligns with Viavi's broader ambition to serve AI-driven applications in aerospace and defense.

Strategic Partnerships and Product Launches: Building the AI-5G Ecosystem

Viavi's recent collaborations reveal its deepening role in next-gen networks:
- AI-RAN Alliance Lab: Funded by the NTIA, this lab in Chandler, Arizona, is a hub for testing AI-native radio access networks (RAN), targeting 5G/6G performance improvements and energy efficiency.
- 6G Research: Partnerships with institutions like ASTAR I2R and King's College London are advancing AI-enhanced beam management and semantic communication frameworks for metaverse applications.
- Non-Terrestrial Networks (NTN)*: Collaborations with KT and Rohde & Schwarz demonstrated NTN's potential for 5G/6G, including full HD video transmission via satellite.

At the Mobile World Congress (MWC) and Optical Fiber Communications (OFC) events in early 2025, Viavi showcased products like the 800G Transport Module for its OneAdvisor platform and the mFVU-3000 FlexLight microscope, which improve inspection speeds for high-speed optical components. These tools directly address the infrastructure needs of AI-driven data centers and 5G rollouts.

Risks and Challenges: Navigating a Volatile Landscape

Despite the positives, Viavi faces headwinds:
1. Segment Imbalances: The OSPP segment (26% of revenue) saw flat growth, hurt by weak consumer electronics demand.
2. Debt Levels: Total debt stands at $640.9 million, with $250 million in convertible notes maturing in 2026.
3. Macroeconomic Risks: A slowdown in global capital spending could delay 5G/AI infrastructure projects.

Analysts project a $11.43 average price target (14% above April 2025's $9.99), but this hinges on NE segment momentum and stabilization of OSPP.

Investment Thesis: A Play on Passive Flows and Long-Term Trends

Viavi's inclusion in the Russell 3000E Growth Index offers a near-term catalyst for liquidity, while its secular growth story in 5G/AI infrastructure provides a longer-term narrative. The company's 30% revenue exposure to Asia-Pacific also positions it to benefit from China's 5G investments and Southeast Asia's digital infrastructure boom.

Investors should consider:
- Entry Point: Look for dips below $10 ahead of the June 30 index inclusion, leveraging the upcoming Q4 earnings (due in late August 2025) to gauge execution.
- Risk Management: Maintain a cautious stance if Q4 revenue falls below guidance ($278–290 million) or macro risks escalate.

Conclusion: A Stock to Watch in the Infrastructure Buildout

Viavi Solutions is a microcosm of the global shift toward high-speed, AI-enabled networks. Its Russell index inclusion could amplify its market visibility, while its product leadership in fiber optics and AI-RAN testing positions it to capitalize on a multiyear buildout. While risks exist, the confluence of passive inflows and secular tailwinds makes VIAV a compelling speculative play for investors willing to navigate near-term volatility.

will be key to watch in Q4, as sustained NE momentum could solidify its status as a growth darling in the telecom infrastructure space.