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Is KLA Becoming the Biggest Beneficiary of AI Semiconductor Spending?
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Key Takeaways
KLA expects advanced packaging revenues to jump from $635M in 2025 to nearly $1B in 2026.
KLAC says AI chip complexity is driving higher demand for inspection and metrology tools.
KLA sees AI semiconductor demand remaining supply-constrained despite fab expansion into 2027.
Artificial intelligence is rapidly reshaping semiconductor capital spending, and KLA Corporation (KLAC - Free Report) appears to be emerging as one of the biggest beneficiaries of this transformation. The company’s third-quarter fiscal 2026 commentary highlighted surging demand for its process control and advanced packaging solutions as chipmakers race to expand AI-related capacity.
KLA’s strength lies in its critical role in semiconductor manufacturing. As AI chips become more complex, manufacturers require higher levels of inspection, metrology and yield management to ensure performance and reliability. Management noted that rising memory complexity, faster product cycles and advanced packaging requirements are significantly increasing process-control intensity across fabs.
The company is already seeing tangible benefits. KLA expects advanced packaging revenues to climb from roughly $635 million in 2025 to nearly $1 billion in 2026, far exceeding earlier projections. The growth is being fueled by booming demand for AI accelerators, high-bandwidth memory and next-generation packaging technologies such as CoWoS and hybrid bonding. Management also emphasized that hyperscaler-driven custom silicon development is creating a wave of new, high-value chip designs that require more intensive process control solutions.
Importantly, KLA believes the current AI-driven semiconductor expansion is still supply-constrained. Executives stated that customers remain unable to meet long-term AI silicon demand despite aggressive fab expansion plans extending into 2027. This backdrop is strengthening KLA’s backlog visibility and supporting expectations for sustained growth in wafer equipment spending.
With rising market share, expanding advanced packaging exposure and increasing process-control intensity across AI chip manufacturing, KLA appears well positioned to remain a major winner from the ongoing AI semiconductor investment cycle.
Applied Materials & ASML Holding Remain Key AI Rivals
While KLA Corporation is gaining momentum from AI semiconductor investments, peers Applied Materials (AMAT - Free Report) and ASML Holding (ASML - Free Report) remain major beneficiaries of the industry’s spending boom.
Applied Materials has strong exposure to deposition, etching and advanced packaging technologies that are increasingly essential for AI accelerators and high-bandwidth memory chips. The company continues to benefit from rising chip complexity and growing demand for advanced packaging solutions. However, KLA appears to be strengthening its competitive position in process control and yield-management solutions, areas becoming increasingly critical as AI chipmakers seek to maximize expensive wafer output.
Meanwhile, ASML Holding dominates the EUV lithography market, which remains central to manufacturing cutting-edge AI semiconductors. Still, KLA management emphasized that process-control intensity is expanding beyond traditional lithography scaling due to larger die sizes, advanced packaging and rising design complexity.
As AI semiconductor demand accelerates, Applied Materials and ASML Holding stand to gain, but KLA’s expanding role in inspection, metrology and advanced packaging could allow it to capture a growing share of incremental semiconductor equipment spending.
KLAC’s Share Price Performance, Valuation and Estimates
KLA’s shares are currently trading at a premium, with a forward 12-month price-to-earnings (P/E) ratio of 38.43, as shown in the chart below.
KLAC Valuation
Image Source: Zacks Investment Research
For fiscal 2026, the Zacks Consensus Estimate for earnings is pegged at $37.06 per share, up 1.2% over the past 30 days. The figure implies a year-over-year increase of 11.4%.
View the Zacks #1 Rank List
Image: Bigstock
Is KLA Becoming the Biggest Beneficiary of AI Semiconductor Spending?
Key Takeaways
Artificial intelligence is rapidly reshaping semiconductor capital spending, and KLA Corporation (KLAC - Free Report) appears to be emerging as one of the biggest beneficiaries of this transformation. The company’s third-quarter fiscal 2026 commentary highlighted surging demand for its process control and advanced packaging solutions as chipmakers race to expand AI-related capacity.
KLA’s strength lies in its critical role in semiconductor manufacturing. As AI chips become more complex, manufacturers require higher levels of inspection, metrology and yield management to ensure performance and reliability. Management noted that rising memory complexity, faster product cycles and advanced packaging requirements are significantly increasing process-control intensity across fabs.
The company is already seeing tangible benefits. KLA expects advanced packaging revenues to climb from roughly $635 million in 2025 to nearly $1 billion in 2026, far exceeding earlier projections. The growth is being fueled by booming demand for AI accelerators, high-bandwidth memory and next-generation packaging technologies such as CoWoS and hybrid bonding. Management also emphasized that hyperscaler-driven custom silicon development is creating a wave of new, high-value chip designs that require more intensive process control solutions.
Importantly, KLA believes the current AI-driven semiconductor expansion is still supply-constrained. Executives stated that customers remain unable to meet long-term AI silicon demand despite aggressive fab expansion plans extending into 2027. This backdrop is strengthening KLA’s backlog visibility and supporting expectations for sustained growth in wafer equipment spending.
With rising market share, expanding advanced packaging exposure and increasing process-control intensity across AI chip manufacturing, KLA appears well positioned to remain a major winner from the ongoing AI semiconductor investment cycle.
Applied Materials & ASML Holding Remain Key AI Rivals
While KLA Corporation is gaining momentum from AI semiconductor investments, peers Applied Materials (AMAT - Free Report) and ASML Holding (ASML - Free Report) remain major beneficiaries of the industry’s spending boom.
Applied Materials has strong exposure to deposition, etching and advanced packaging technologies that are increasingly essential for AI accelerators and high-bandwidth memory chips. The company continues to benefit from rising chip complexity and growing demand for advanced packaging solutions. However, KLA appears to be strengthening its competitive position in process control and yield-management solutions, areas becoming increasingly critical as AI chipmakers seek to maximize expensive wafer output.
Meanwhile, ASML Holding dominates the EUV lithography market, which remains central to manufacturing cutting-edge AI semiconductors. Still, KLA management emphasized that process-control intensity is expanding beyond traditional lithography scaling due to larger die sizes, advanced packaging and rising design complexity.
As AI semiconductor demand accelerates, Applied Materials and ASML Holding stand to gain, but KLA’s expanding role in inspection, metrology and advanced packaging could allow it to capture a growing share of incremental semiconductor equipment spending.
KLAC’s Share Price Performance, Valuation and Estimates
KLA’s shares have appreciated 63.1% in the trailing six months, outperforming the Zacks Computer & Technology sector’s rise of 18.1% and the Zacks Electronics - Miscellaneous Products industry’s surge of 43.6%.
KLAC Stock Performance
Image Source: Zacks Investment Research
KLA’s shares are currently trading at a premium, with a forward 12-month price-to-earnings (P/E) ratio of 38.43, as shown in the chart below.
KLAC Valuation
Image Source: Zacks Investment Research
For fiscal 2026, the Zacks Consensus Estimate for earnings is pegged at $37.06 per share, up 1.2% over the past 30 days. The figure implies a year-over-year increase of 11.4%.
Image Source: Zacks Investment Research
KLA currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.