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KLAC vs. Advanced Energy: Which AI Stock is a Buy Right Now?
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Key Takeaways
Advanced Energy benefits from AI demand, new products and plans to add $2.5B capacity by 2026.
KLA sees growth from advanced packaging, leading-edge logic and the WFE market rising to the mid-$130B range.
KLA faces headwinds from weak product mix, rising DRAM costs, tariffs and supply constraints.
KLA (KLAC - Free Report) and Advanced Energy Industries (AEIS - Free Report) play key roles in the AI value chain. Both companies are benefiting from higher spending on developing AI infrastructure. Per CNBC, hyperscalers like Alphabet, Meta Platforms, Amazon and Microsoft are expected to spend $700 billion on developing AI infrastructure in 2026 on a combined basis. This means strong demand for more powerful chips driving the demand for more fabs, equipment and power. While KLAC offers process control and inspection equipment for semiconductor fabs, Advanced Energy provides AC/DC, DC/DC power supplies, plasma power, and measurement systems.
KLA or AEIS, which is a better buy in the current scenario? Let us find out.
KLAC Rides on Strong Advanced Packaging Growth
KLA is benefiting from strong demand for leading-edge logic, high-bandwidth memory and advanced packaging, which is driving top-line growth. Advanced packaging revenues are expected to grow in the mid to high-teens on a year-over-year basis in 2026. Strong investments in WFE and advanced packaging represent a strong growth opportunity for the company. Growth of advanced packaging supporting heterogeneous chip integration has become a new market for KLA, which is currently worth $11 billion and growing faster than core WFE.
KLA’s robust portfolio and its leadership in process control systems are enabling customers to manage increasing design complexity. Process control accelerates time to results by resolving process integration challenges during the fab ramp-up phase to optimize time to market for a diverse mix of semiconductor designs.
KLAC expects the core WFE market to grow in the high-single to low-double digits in 2026, reaching the low $120-billion range. The company expects the advanced packaging component of the market to grow at a similar rate to $12 billion for a total market forecast in the mid-$130-billion range.
KLA expects third-quarter fiscal 2026 revenues of $3.35 billion (+/- $150 million), reflecting a modestly weak product mix on a sequential basis. The guidance reflects rapidly escalating costs of DRAM chips used in KLA’s image processing computers that ship with its systems, thereby hurting the gross margin. Increasing lead times of its products due to supply constraints and negative tariff impacts are headwinds in the near term.
AEIS Rides on Strong Portfolio & Diversified Business
Advanced Energy’s expanding portfolio has been noteworthy. In 2025, AEIS introduced 26 products across its target markets, including semiconductor, industrial and medical applications, which is helping drive growth and expand its market presence. Advanced Energy’s expanding footprint in the industrial and medical markets is a key catalyst. The data center market offers strong growth opportunities for AEIS as hyperscalers continue to adopt its customized power solutions in a variety of AI rack applications.
Advanced Energy’s focus on developing products for next-generation semiconductor technologies, including eVoS, NavX and 800-volt products, has been a major growth driver. These innovations are expected to drive growth by addressing the needs of customers working on advanced semiconductor processes. AEIS is investing in expanding its production capacity, particularly in Thailand and Mexico, to meet growing customer demand in the data center end market. The company expects to add $2.5 billion in revenue-generating capacity by the end of 2026, which will further strengthen AEIS’s position in the market.
AEIS’s strong customer demand and growth across its target markets, including semiconductor, industrial and medical applications, are expected to benefit the company’s top-line growth. For the first quarter of 2026, Advanced Energy expects revenues of $500 million (+/- $20 million).
Earnings Estimate Revision Positive for Both KLAC & AEIS
The Zacks Consensus Estimate for KLAC’s fiscal 2026 earnings is pegged at $36.62 per share, up four cents over the past 30 days, indicating a 10% increase over the fiscal 2025 reported figure.
However, the consensus mark for Advanced Energy’s 2026 earnings has climbed 1.5% to $8.32 per share over the past 30 days, suggesting 29.8% growth over the 2025 actual.
Advanced Energy Industries, Inc. Price and Consensus
Year to date, Advanced Energy shares have jumped 51.5% compared with KLA’s return of 23.3%.
KLAC & AEIS Price Performance
Image Source: Zacks Investment Research
Valuation-wise, both KLA and Advanced Energy are overvalued, as suggested by the Value Score of F.
However, in terms of forward 12-month price/earnings, KLAC shares are trading at 33.72X, lower than Advanced Energy’s 36.94X.
KLAC & AEIS Valuation
Image Source: Zacks Investment Research
Conclusion
AEIS is expected to benefit from strong demand for its products across data center and semiconductor end-markets. An expanding portfolio bodes well for Advanced Energy’s prospects. However, KLA’s near-term opportunities are plagued by a weak product mix, rapidly escalating costs of DRAM chips that hurt the gross margin and supply constraints, negatively impacting lead times.
View the Zacks #1 Rank List
Image: Bigstock
KLAC vs. Advanced Energy: Which AI Stock is a Buy Right Now?
Key Takeaways
KLA (KLAC - Free Report) and Advanced Energy Industries (AEIS - Free Report) play key roles in the AI value chain. Both companies are benefiting from higher spending on developing AI infrastructure. Per CNBC, hyperscalers like Alphabet, Meta Platforms, Amazon and Microsoft are expected to spend $700 billion on developing AI infrastructure in 2026 on a combined basis. This means strong demand for more powerful chips driving the demand for more fabs, equipment and power. While KLAC offers process control and inspection equipment for semiconductor fabs, Advanced Energy provides AC/DC, DC/DC power supplies, plasma power, and measurement systems.
KLA or AEIS, which is a better buy in the current scenario? Let us find out.
KLAC Rides on Strong Advanced Packaging Growth
KLA is benefiting from strong demand for leading-edge logic, high-bandwidth memory and advanced packaging, which is driving top-line growth. Advanced packaging revenues are expected to grow in the mid to high-teens on a year-over-year basis in 2026. Strong investments in WFE and advanced packaging represent a strong growth opportunity for the company. Growth of advanced packaging supporting heterogeneous chip integration has become a new market for KLA, which is currently worth $11 billion and growing faster than core WFE.
KLA’s robust portfolio and its leadership in process control systems are enabling customers to manage increasing design complexity. Process control accelerates time to results by resolving process integration challenges during the fab ramp-up phase to optimize time to market for a diverse mix of semiconductor designs.
KLAC expects the core WFE market to grow in the high-single to low-double digits in 2026, reaching the low $120-billion range. The company expects the advanced packaging component of the market to grow at a similar rate to $12 billion for a total market forecast in the mid-$130-billion range.
KLA expects third-quarter fiscal 2026 revenues of $3.35 billion (+/- $150 million), reflecting a modestly weak product mix on a sequential basis. The guidance reflects rapidly escalating costs of DRAM chips used in KLA’s image processing computers that ship with its systems, thereby hurting the gross margin. Increasing lead times of its products due to supply constraints and negative tariff impacts are headwinds in the near term.
AEIS Rides on Strong Portfolio & Diversified Business
Advanced Energy’s expanding portfolio has been noteworthy. In 2025, AEIS introduced 26 products across its target markets, including semiconductor, industrial and medical applications, which is helping drive growth and expand its market presence. Advanced Energy’s expanding footprint in the industrial and medical markets is a key catalyst. The data center market offers strong growth opportunities for AEIS as hyperscalers continue to adopt its customized power solutions in a variety of AI rack applications.
Advanced Energy’s focus on developing products for next-generation semiconductor technologies, including eVoS, NavX and 800-volt products, has been a major growth driver. These innovations are expected to drive growth by addressing the needs of customers working on advanced semiconductor processes. AEIS is investing in expanding its production capacity, particularly in Thailand and Mexico, to meet growing customer demand in the data center end market. The company expects to add $2.5 billion in revenue-generating capacity by the end of 2026, which will further strengthen AEIS’s position in the market.
AEIS’s strong customer demand and growth across its target markets, including semiconductor, industrial and medical applications, are expected to benefit the company’s top-line growth. For the first quarter of 2026, Advanced Energy expects revenues of $500 million (+/- $20 million).
Earnings Estimate Revision Positive for Both KLAC & AEIS
The Zacks Consensus Estimate for KLAC’s fiscal 2026 earnings is pegged at $36.62 per share, up four cents over the past 30 days, indicating a 10% increase over the fiscal 2025 reported figure.
KLA Corporation Price and Consensus
KLA Corporation price-consensus-chart | KLA Corporation Quote
However, the consensus mark for Advanced Energy’s 2026 earnings has climbed 1.5% to $8.32 per share over the past 30 days, suggesting 29.8% growth over the 2025 actual.
Advanced Energy Industries, Inc. Price and Consensus
Advanced Energy Industries, Inc. price-consensus-chart | Advanced Energy Industries, Inc. Quote
KLAC vs. AEIS: Stock Performance & Valuation
Year to date, Advanced Energy shares have jumped 51.5% compared with KLA’s return of 23.3%.
KLAC & AEIS Price Performance
Image Source: Zacks Investment Research
Valuation-wise, both KLA and Advanced Energy are overvalued, as suggested by the Value Score of F.
However, in terms of forward 12-month price/earnings, KLAC shares are trading at 33.72X, lower than Advanced Energy’s 36.94X.
KLAC & AEIS Valuation
Image Source: Zacks Investment Research
Conclusion
AEIS is expected to benefit from strong demand for its products across data center and semiconductor end-markets. An expanding portfolio bodes well for Advanced Energy’s prospects. However, KLA’s near-term opportunities are plagued by a weak product mix, rapidly escalating costs of DRAM chips that hurt the gross margin and supply constraints, negatively impacting lead times.
Currently, Advanced Energy has a Zacks Rank #2 (Buy), making the stock a must-pick compared with KLA, which has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.