A month has gone by since the last earnings report for KLA (KLAC Quick QuoteKLAC - Free Report) . Shares have lost about 4.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is KLA due for a breakout? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent catalysts for KLA Corporation before we dive into how investors and analysts have reacted as of late.

KLA Corporation Q1 Earnings Surpass Estimates, Revenues Increase Y/Y

KLA Corporation reported first-quarter fiscal 2026 non-GAAP earnings of $8.81 per share, beating the Zacks Consensus Estimate by 3.04%. The figure surged 20.2% year over year.

Revenues increased 13% year over year to $3.21 billion, surpassing the Zacks Consensus Estimate by 1.72%.

KLAC’s Q1 Segmental Details

In terms of reportable segments, Semiconductor Process Control revenues (90.3% of total revenues) increased 12.6% year over year and 1% sequentially to $2.89 billion.

Foundry & Logic accounted for about 74%, whereas Memory constituted about 26% of Semiconductor Process Control revenues.

Specialty Semiconductor Process revenues (3.7% of total revenues) were $119.8 million, down 6.7% year over year and 16% sequentially.

PCB and Component Inspection revenues (5.9% of total revenues) increased 37.3% year over year to $189.5 million, and up 23% on a sequential basis.

KLAC Top-Line Details

Product revenues (which accounted for 76.8% of total revenues) rose 12.2% year over year to $2.46 billion. Service revenues (23.2% of total revenues) increased 15.6% year over year and 6% sequentially to $744.7 million.

In terms of major products, Wafer Inspection and Patterning Systems (including metrology and reticle inspection) accounted for 48% and 21%, respectively, of KLA’s total revenues in the fiscal first quarter. 

Wafer Inspection revenues increased 12% year over year but decreased 13% sequentially to $1.53 billion. Patterning revenues moved up 16% year over year and 47% sequentially to $668 million. 

In terms of the regional breakdown of revenues, Taiwan and China led revenue contributions with 25% and 39%, respectively. Korea accounted for 9%, Japan 9%, and North America 9%. Europe contributed 5%, whereas the remaining 3% came from the rest of Asia.

KLA’s Operating Details

In the first quarter of fiscal 2026, the non-GAAP gross margin was 62.5%, 50 basis points above the midpoint of the guidance range.

Research and development (R&D) expenses increased 11.5% year over year to $360.5 million. As a percentage of revenues, R&D expenses decreased 10 basis points (bps) on a year-over-year basis to 11.2%.

Selling, general and administrative (SG&A) expenses increased 7.1% year over year to $269 million. As a percentage of revenues, SG&A expenses decreased 50 bps year over year to 8.4%.

The fiscal first-quarter non-GAAP operating expenses were $618.

The fiscal first-quarter non-GAAP operating margin was 43.2%.

KLAC Balance Sheet & Cash Flow

As of Sept. 30, 2025, cash, cash equivalents, and marketable securities totaled $4.68 billion compared with $4.49 billion as of June 30, 2025.

Long-term debt at the end of the fiscal first quarter was $5.88 billion, unchanged from the figure reported in the previous quarter.

Cash flow from operating activities was $1.16 billion, unchanged from the figure reported in the previous quarter. The free cash flow was $1.07 billion for the fiscal first quarter.

In the fiscal first quarter, KLAC repurchased $545 million worth of shares and paid $254 million in dividends. 

On April 30, 2025, KLAC announced a $5 billion share repurchase authorization.

KLAC Provides Positive 2Q26 Guidance

For second-quarter fiscal 2026, revenues are expected to be $3.225 billion, plus/minus $150 million. 

KLA expects non-GAAP earnings of $8.70 per share, plus/minus 78 cents.

The company expects a non-GAAP gross margin of 62%, plus/minus 1%. Operating expense is expected to be roughly $635 million in the fiscal second quarter.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a upward trend in fresh estimates.

VGM Scores

Currently, KLA has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a score of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, KLA has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

KLA belongs to the Zacks Electronics - Miscellaneous Products industry. Another stock from the same industry, Teradyne (TER Quick QuoteTER - Free Report) , has gained 1.4% over the past month. More than a month has passed since the company reported results for the quarter ended September 2025.

Teradyne reported revenues of $769.21 million in the last reported quarter, representing a year-over-year change of +4.3%. EPS of $0.85 for the same period compares with $0.90 a year ago.

For the current quarter, Teradyne is expected to post earnings of $1.36 per share, indicating a change of +43.2% from the year-ago quarter. The Zacks Consensus Estimate has changed +27.4% over the last 30 days.

Teradyne has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.