Viavi completes data center pivot as legacy telecom fades
- Viavi is shifting from slow telecom spending toward data centers and aerospace and defense.
- Data center customers have reached about 50 percent of NSE revenue.
- The company finished integrating Spirent in the June quarter to boost artificial intelligence testing.
- Hyperscalers are buying more field instruments to check the fiber networks that link data centers.
- The main risk is whether a slowdown in cloud spending could hurt its biggest growth engine.
The pivot is complete
Viavi historically relied on telecom and cable companies buying network test gear. That market is cyclical and slow. The company is now moving toward data centers, aerospace and defense, and optical products.
The latest results proved this pivot reached a major milestone. Data center customers now make up about 50 percent of the core NSE segment. Aerospace and defense adds another 17 percent. This means the legacy service provider business is now a clear minority of the segment.
The company also finished integrating Spirent in the June quarter. This adds new tools for testing artificial intelligence networks, including a new validation product for Ultra Ethernet Transport. Management expects these drivers can help them reach a $500 million quarterly revenue run rate by 2027.
The bear case is competition and cyclical risk. Viavi is tying its story to popular areas like artificial intelligence and defense. If cloud spending cools or if wireless test stays weak, the slower parts of the company will become easier to see.
Test gear for hard networks
Viavi makes money by selling hardware, software, and services that help customers test, monitor, and secure complex networks and optical systems. Its tools are used in labs, factories, field work, data centers, wireless networks, defense systems, and anti-counterfeiting products.
The bigger segment is Network and Service Enablement, or NSE. It includes lab and production test tools for fast optical links, field instruments for network work, aerospace and defense products, and wireless infrastructure test gear.
The smaller segment is Optical Security and Performance, or OSP. It uses optical coating skills for security pigments, 3D sensing filters, and other optical parts. This segment can be useful, but parts of it depend on consumer electronics product cycles.
The model breaks if customer spending turns down. Data centers are growing fast now, but they are competitive and tied to artificial intelligence capital spending. Service providers remain cyclical, wireless test is still sluggish, and OSP has customer concentration risk in 3D sensing.
Where the products fit
Fiber lab and production test
These tools test high-speed optical links used by data center ecosystem players. Viavi recently added Ultra Ethernet Transport validation for large artificial intelligence workloads.
Field instruments
These are portable tools used to deploy and maintain fiber and wireless networks. Demand from hyperscalers is rising to test links between data centers.
Aerospace and defense
This includes positioning, navigation, and timing products. It now accounts for about 17 percent of the NSE segment revenue.
Wireless infrastructure test
These products test wireless network equipment. The market is weak today because major network equipment makers are spending slowly, but a turn would add another growth lever.
Anti-counterfeiting optical products
Viavi sells optical security products, including pigments for currency and other high-value documents. This gives OSP a steady market outside of telecom.
3D sensing optical filters
These parts are used in consumer electronics, mainly facial recognition. The risk is that demand can move with one large customer's product cycle.
Two reported segments
Segment mix reflects recent reporting where Network and Service Enablement makes up roughly 79 percent of revenue and Optical Security and Performance makes up 21 percent. Management confirmed data centers reached about 50 percent of NSE.
What could go wrong
AI data center spending slows
High impact · Medium oddsData centers are now the main growth engine inside NSE. If cloud companies slow artificial intelligence capital spending, Viavi could lose the growth driver covering up weaker legacy areas.
Spirent revenue misses targets
Medium impact · Medium oddsViavi finished the Spirent integration in the June quarter. The focus now shifts to whether the acquired business can hit its growth targets in artificial intelligence testing without missing a step.
Wireless test stays weak
Medium impact · High oddsWireless infrastructure test remains in a prolonged downturn. Management expects weakness at major network equipment makers to stay sluggish in the medium term.
OSP customer and product cycle risk
Medium impact · Medium oddsThe OSP segment relies heavily on 3D sensing and anti-counterfeiting. The 3D sensing business appears tied to a large customer and consumer electronics cycles, which can change fast.
Restructuring hurts execution
Medium impact · Medium oddsViavi announced a January 2026 plan to reduce its global workforce by about 5 percent. Cost cuts can help margins, but they can also hurt morale and slow product work if handled poorly.
In one breath
What does Viavi Solutions do?
Viavi sells test, measurement, and optical products. Customers use its tools to test data center links, telecom networks, wireless equipment, defense systems, and security products.
Why is Viavi linked to artificial intelligence?
Artificial intelligence data centers need fast fiber links, optical modules, and reliable networks. Viavi sells lab tools and field instruments that help build and check those networks.
What is the biggest risk for VIAV stock?
The biggest risk is that the market pays for a data center and defense growth story before the proof is complete. A slowdown in cloud spending or weak wireless test demand could pressure the thesis.
Sources and research notes
This page combines Finn's company research with public filings and other cited materials. The thesis is reviewed when material company information changes; Finn Scores use the latest available scoring data.
- Thesis reviewed
- September 6, 2026
- Score data
- September 6, 2026
- Reviewed by
- Shivam Bharuka
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