Viavi Solutions Gains From AI Infrastructure Demand as Margins Expand

Viavi Solutions Inc. VIAV is benefiting from rising AI infrastructure investment as demand for data center networking, testing and cybersecurity solutions drives growth. Fourth-quarter fiscal 2026 revenues rose 52.5% year over year to $443.1 million, while non-GAAP EPS reached 34 cents. Data center demand, aerospace and defense activity and contributions from acquired Spirent product lines supported the results.

VIAV's Q4 Results Confirm Strong AI Exposure

Network and Service Enablement (NSE) revenues increased 69.2% year over year to $353.9 million. Growth was driven by demand for products serving the data center ecosystem, aerospace and defense demand and contributions from Spirent product lines. Management continues to cite AI infrastructure, high-performance computing, optical networking and hyperscale data centers as key demand drivers.

Viavi Solutions Guides for Another Strong Quarter

Viavi expects first-quarter fiscal 2027 revenues of $450-$460 million and non-GAAP EPS of 40-42 cents. NSE revenue is projected at $360-$368 million, while OSP revenue is expected at $90-$92 million.

The Zacks Consensus Estimate calls for fiscal 2027 revenues of $1.874 billion, up 23.5% from fiscal 2026, with EPS expected to rise to $1.22 from $1.

VIAV's Margins Expand on Scale and Mix

Fourth-quarter non-GAAP operating margin increased to 24.0% from 14.4% a year earlier, a 960-basis-point expansion. NSE operating margin reached 20.0%, up 1,540 basis points year over year.

Management expects consolidated non-GAAP operating margin of 27.1% in first-quarter fiscal 2027, including a 100-basis-point benefit from tariff refunds.

Viavi Solutions Adds New AI Testing Capabilities

Viavi launched its Ultra Ethernet Transport validation platform in June 2026 to support next-generation AI networks. In May, it introduced the CyberFlood CF1000, a 400G security and application performance testing platform designed for AI data center infrastructure.

The launches expand Viavi's capabilities in AI network validation, encrypted traffic testing and cybersecurity while complementing the acquired Spirent portfolio. Their contribution will depend on customer adoption and execution.

VIAV's Rank Supports a Balanced Event View

VIAV carries a Zacks Rank #3 (Hold), with a Value Score of D, Growth Score of D, Momentum Score of D and VGM Score of F. The Zacks Style Scores complement the Zacks Rank by evaluating value, growth and momentum characteristics.

Viavi's AI exposure and margin expansion support the growth case, although its Zacks Rank #3 and weak Style Scores warrant caution. Within the same industry, Knowles Corporation KN has an Outperform recommendation, while ADTRAN Holdings, Inc. ADTN carries an Underperform recommendation, offering some context on the differing outlooks across peers.

Viavi's AI exposure and margin expansion support the growth case, but the Zacks Rank #3 and weak Style Scores provide a cautionary counterweight to the strong quarterly results. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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