Keysight Technologies Inc. (KEYS) stock plummeted 5.91% in pre-market trading on Wednesday, despite the company reporting strong fiscal first-quarter 2025 results that beat estimates on both the top and bottom lines. The sell-off appears to be driven by Keysight's cautious outlook for the rest of the year, citing macroeconomic uncertainty and potential impacts from policy changes in the United States.

In the earnings call, Keysight's management highlighted several positive factors, including:

• Growth in the Communications Solutions Group driven by robust demand for wireline and AI-related products, as well as stabilization in the wireless business.
• Continued strength in the aerospace, defense, and government segment, with a record first-quarter revenue.
• Return to growth in orders for two consecutive quarters, indicating a gradual recovery underway.

However, the company also flagged some areas of concern:

• Softness in the automotive and electric vehicle (EV) battery testing market due to muted activity in manufacturing and EV battery development.
• Mixed demand across end markets in the Electronic Industrial Solutions Group, with semiconductor strength offset by weakness in other areas like general electronics.
• Uncertainty stemming from potential US policy actions, which could impact the overall macro environment.

Despite the challenges, Keysight remains optimistic about its long-term prospects, particularly in areas like AI, 6G, and quantum computing. The company's diverse portfolio, deep customer engagements, and robust innovation pipeline position it well to capitalize on emerging opportunities, according to management.