Viavi Solutions (NASDAQ: VIAV) stuns with bullish Q2 guide—can this optical play ride the hyperscaler wave?

Viavi Solutions Inc. (NASDAQ: VIAV) surprised Wall Street and sector observers alike with its first-quarter fiscal 2026 results, delivering a strong revenue beat and forward guidance that re-energized investor sentiment around the long-awaited rebound in data centre and optical infrastructure demand. The company reported net revenue of USD 299.1 million, marking a 25.6 percent year-over-year increase, supported by broad-based strength in its Network and Service Enablement (NSE) business.

While the headline numbers themselves impressed, what truly shifted the narrative was Viavi Solutions’ second-quarter outlook, which projected revenues in the range of USD 360 million to USD 370 million and non-GAAP earnings per share between USD 0.18 and USD 0.20. This guidance came in significantly ahead of consensus, leading many investors and analysts to reassess the timing and breadth of the optical testing and data centre equipment recovery cycle.

What makes this development more consequential is not just Viavi Solutions’ individual performance, but its positioning as a bellwether for broader demand trends across lab, production, and field instrumentation for hyperscale data centre operators and optical network builders. After several quarters of stagnation in telecom-related spend, the signals now suggest that hyperscalers are reaccelerating investment—especially in support of next-generation interconnect standards such as 400G, 800G, and 1.6T.

Why the Q1 2026 guidance from Viavi Solutions matters for data centre and optical infrastructure rebound

For the first quarter of fiscal 2026, Viavi Solutions posted particularly strong growth in its Network and Service Enablement (NSE) segment, which generated USD 216 million in revenue, up 35.5 percent compared to the same period last year. Management attributed this growth primarily to robust demand from the data centre ecosystem, specifically in the lab and production testing environments, as well as field instrumentation required for large-scale fibre deployments. Aerospace and defence applications also contributed meaningfully, but it was clear from the earnings call that data centre visibility is improving.

The implications of this trend are significant. Over the past several quarters, data centre and optical network instrumentation had experienced cyclical pressure as operators delayed spending amid macroeconomic uncertainty, component shortages, and uneven demand. Viavi Solutions’ Q1 beat and Q2 guidance have flipped that script. According to the company, customer engagement is now expanding across both Tier-1 hyperscalers and emerging cloud infrastructure players, signalling not just a restocking cycle but a potential inflection in capex deployment for future-proofed connectivity.

Adding to the bullish tone, Viavi Solutions’ strategic acquisitions are beginning to reshape its customer mix in a way that insulates the business from some of the volatility in its traditional service provider base. The recent acquisition of Ethernet test and channel emulation businesses from Spirent Communications plc and Keysight Technologies Inc. is projected to contribute to an updated customer composition, which will now include approximately 45 percent service providers, 40 percent data centre clients, and 15 percent aerospace and defence customers. This shift toward data centre exposure enhances Viavi Solutions’ alignment with secular infrastructure tailwinds rather than cyclical telecom spend alone.

In other words, the company is moving beyond legacy telecom and into segments with more consistent demand drivers. This transition appears to be paying off, as investors rewarded the stock with a sharp rally following the results, pushing shares up by approximately 9 percent in after-hours trading.

How Viavi Solutions is benefiting from strategic mix shifts toward hyperscale and fibre growth

Viavi Solutions’ management has been vocal about its intention to pivot the business model toward high-growth verticals that align with megatrends such as AI workloads, cloud network expansion, and advanced optical component development. The Spirent asset acquisition is central to this strategy, bringing capabilities that directly support 800G and 1.6T Ethernet validation—a key requirement for next-generation data centre architectures.

By rebalancing its customer portfolio toward hyperscale operators and high-throughput fibre customers, Viavi Solutions is gradually reducing its dependency on cable and wireless test cycles, which have been more erratic and susceptible to macro capex compression. This matters because the nature of hyperscale infrastructure investments is longer-dated, more predictable, and increasingly urgent in the age of artificial intelligence. As AI inference workloads move closer to the edge, the need for high-speed, ultra-low-latency interconnect testing will only grow.

The company also noted that in addition to lab instruments for design validation, it is seeing improved pull-through in production and field deployments—indicating that customers are moving from prototyping into scaled rollouts. This sequencing, from R&D to deployment, is what typically signals the start of a new demand cycle, and Viavi Solutions is positioning itself as an early beneficiary.

How are institutional investors interpreting Viavi Solutions’ post‑earnings rally and what could this signal for optical test valuations in Q4 2025 and beyond?

Institutional sentiment has turned more constructive following the results. Several equity analysts upgraded their ratings or raised price targets, citing improved revenue visibility, product line synergies, and a more resilient customer base. For example, some brokerage notes indicated that Viavi Solutions is well-positioned to gain share from slower-moving competitors as hyperscalers ramp spending on new optical and Ethernet deployments.

The market’s reaction also reflects broader anticipation of a multi-quarter upcycle in optical component validation, field service instrumentation, and data centre expansion testing. As such, Viavi Solutions’ strong guidance may be a leading indicator for peer companies operating in adjacent test and measurement markets. Investors will likely scrutinize companies like Keysight Technologies Inc., EXFO Inc., and Spirent Communications plc for similar signs of momentum.

However, risks remain. Viavi Solutions cautioned that while data centre orders are ramping, the wireless segment continues to face headwinds, and service provider spending may remain choppy in the near term. Moreover, while the Spirent acquisition offers scale and product synergy benefits, integration execution and cost rationalization will be key to preserving margin expansion in upcoming quarters.

Why the results offer a strong signal for the broader optical test and networking equipment sector

For investors watching the optical and networking hardware space, Viavi Solutions’ Q1 performance and Q2 guidance offer more than just one company’s earnings beat—they serve as a broader market signal. The implied health of the hyperscale capex cycle, and the early signs of recovery in fibre deployments and Ethernet validation, suggest that a demand renaissance may be underway for lab and production test instruments.

This could have a ripple effect on supply chains and component vendors, especially those aligned with 400G and 800G ecosystems. Suppliers of optical transceivers, fibre cables, multiplexers, and network analyzers are all positioned to benefit as infrastructure upgrades accelerate.

In essence, the current data points imply that we are past the bottom in test and measurement spending, and that enterprise and cloud buyers are preparing for higher-throughput, AI-optimized network architectures. If Viavi Solutions’ trajectory holds, it will not only outperform but also help set expectations for the broader sector heading into calendar 2026.

Key takeaways: Why Viavi Solutions’ Q1 beat and Q2 guidance could mark a turning point for data centre and optical infrastructure stocks

Viavi Solutions Inc. (NASDAQ: VIAV) delivered a surprisingly strong Q1 FY26 performance and issued bullish Q2 guidance, driving a sharp rally in its stock price and reinforcing investor optimism around the recovery in data centre and optical test demand. Below are the key takeaways summarizing the company’s position and broader implications:

• Viavi Solutions posted Q1 FY26 revenue of USD 299.1 million, up 25.6 percent year-over-year, driven primarily by 35.5 percent growth in its Network and Service Enablement (NSE) segment.

• Q2 FY26 guidance of USD 360–370 million in revenue and USD 0.18–0.20 in non-GAAP earnings per share came in well above analyst expectations, signalling stronger order visibility and broad-based demand acceleration.

• The company is benefiting from a customer mix shift driven by its Spirent acquisition, with hyperscale data centre clients now accounting for approximately 40 percent of its business, reducing exposure to slower-moving telecom and wireless segments.

• Management highlighted significant momentum in both lab and production testing environments for data centre interconnects, suggesting that the 800G/1.6T cycle is moving from R&D into commercial deployment.

• Institutional investors responded positively, with a ~9 percent after-hours rally in Viavi Solutions’ stock following the earnings announcement, and analysts highlighting the company as a potential sector leader in the optical instrumentation recovery.

• While optimism is building, Viavi Solutions noted that the wireless segment and service provider capex remain sluggish, and integration of the Spirent assets will be key to sustaining margins and operating leverage.

• The results are being interpreted as a potential leading indicator for the broader optical and test-and-measurement ecosystem, including peers such as Keysight Technologies Inc., EXFO Inc., and Spirent Communications plc.

This combination of strategic repositioning, demand-side recovery, and stronger-than-expected guidance positions Viavi Solutions as one of the more compelling plays in the evolving AI-driven infrastructure landscape.