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Can Rising Process Control Intensity Drive KLA's Next Growth Phase?
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Key Takeaways
KLA's fiscal third-quarter revenues rose 11% year over year to $3.42 billion on stronger demand.
KLAC expects the growth of semiconductor process control systems to be more than 20% in 2026.
KLA said its process control market share has expanded 360 basis points since 2021.
KLA Corporation (KLAC - Free Report) is seeing growing benefits from rising process control intensity across the semiconductor industry, a trend that could support its next phase of growth.
As chip designs become more complex, semiconductor manufacturers are increasing investments in inspection, metrology and yield-management tools to improve production efficiency. KLA believes process control is becoming more critical as customers deal with faster product cycles, higher-value wafers, greater design complexity and advanced manufacturing requirements.
The company’s recent performance highlights this trend. In the fiscal third quarter of 2026, revenues increased 11% year over year to $3.42 billion, driven by stronger investments in leading-edge foundry and logic technologies as well as high-bandwidth memory. Management expects the semiconductor process control systems business to grow more than 20% in 2026, outpacing the broader wafer fabrication equipment market.
KLA’s leadership position in process control also continues to strengthen. The company noted that its share of the process control market has expanded 360 basis points since 2021 and is now roughly seven times larger than that of the nearest competitor. Market-share gains across inspection and metrology categories further reinforce its competitive position.
Another growth driver is the industry’s increasing focus on yield improvement. With semiconductor demand remaining strong and advanced capacity limited, chipmakers are looking for ways to extract higher output from existing facilities. Management highlighted that adding process control tools is often one of the fastest and most effective ways to improve yields and optimize production.
As semiconductor manufacturing becomes more sophisticated, demand for process control solutions is likely to rise. Supported by growing process complexity, expanding market share and increasing customer investments in yield optimization, KLA appears well positioned to benefit from this long-term industry trend.
KLA’s Competitive Landscape
KLA shares competitive space with Advanced Energy Industries, Inc. (AEIS - Free Report) and MKS Inc. (MKSI - Free Report) in the semiconductor and AI-driven chip manufacturing market.
Advanced Energy is benefiting from strong demand tied to AI infrastructure, data center investments and semiconductor capacity expansion. The company continues to gain traction from its eVoS, eVerest and NavX technologies, which support leading-edge semiconductor manufacturing through higher throughput and yield improvements. Advanced Energy is also expanding its manufacturing footprint and capacity to boost rising demand across semiconductor and data center markets.
Meanwhile, MKS benefits from broad exposure to semiconductor and electronics packaging markets. The company is seeing strong momentum in DRAM, logic and foundry applications, supported by rising investments in AI infrastructure and high-bandwidth memory. MKS is also gaining from growing packaging complexity as AI applications increase demand for advanced PCB, chemistry and packaging solutions.
KLA operates differently within the semiconductor value chain, focusing primarily on process control, inspection and metrology solutions. Rising advanced packaging demand, increasing chip complexity and higher process control intensity continue to support KLA’s positioning in leading-edge semiconductor manufacturing.
Overall, KLA benefits from growing demand for process control solutions, Advanced Energy gains from rising adoption of power technologies in semiconductor and AI infrastructure markets, while MKS leverages broad semiconductor and advanced packaging exposure, creating distinct positioning across the semiconductor ecosystem.
KLAC stock is currently trading at a premium compared with its industry peers, with a forward 12-month price-to-earnings (P/E) ratio of 41.88, as shown in the chart below.
Image Source: Zacks Investment Research
Earnings Estimate Trend of KLAC
For fiscal 2026 and 2027, the Zacks Consensus Estimate for KLAC’s earnings has moved up over the past 60 days by 1.2% and 5.1%, respectively. The estimated figures for fiscal 2026 and 2027 reflect year-over-year increases of 11.4% and 34.3%, respectively.
View the Zacks #1 Rank List
Image: Bigstock
Can Rising Process Control Intensity Drive KLA's Next Growth Phase?
Key Takeaways
KLA Corporation (KLAC - Free Report) is seeing growing benefits from rising process control intensity across the semiconductor industry, a trend that could support its next phase of growth.
As chip designs become more complex, semiconductor manufacturers are increasing investments in inspection, metrology and yield-management tools to improve production efficiency. KLA believes process control is becoming more critical as customers deal with faster product cycles, higher-value wafers, greater design complexity and advanced manufacturing requirements.
The company’s recent performance highlights this trend. In the fiscal third quarter of 2026, revenues increased 11% year over year to $3.42 billion, driven by stronger investments in leading-edge foundry and logic technologies as well as high-bandwidth memory. Management expects the semiconductor process control systems business to grow more than 20% in 2026, outpacing the broader wafer fabrication equipment market.
KLA’s leadership position in process control also continues to strengthen. The company noted that its share of the process control market has expanded 360 basis points since 2021 and is now roughly seven times larger than that of the nearest competitor. Market-share gains across inspection and metrology categories further reinforce its competitive position.
Another growth driver is the industry’s increasing focus on yield improvement. With semiconductor demand remaining strong and advanced capacity limited, chipmakers are looking for ways to extract higher output from existing facilities. Management highlighted that adding process control tools is often one of the fastest and most effective ways to improve yields and optimize production.
As semiconductor manufacturing becomes more sophisticated, demand for process control solutions is likely to rise. Supported by growing process complexity, expanding market share and increasing customer investments in yield optimization, KLA appears well positioned to benefit from this long-term industry trend.
KLA’s Competitive Landscape
KLA shares competitive space with Advanced Energy Industries, Inc. (AEIS - Free Report) and MKS Inc. (MKSI - Free Report) in the semiconductor and AI-driven chip manufacturing market.
Advanced Energy is benefiting from strong demand tied to AI infrastructure, data center investments and semiconductor capacity expansion. The company continues to gain traction from its eVoS, eVerest and NavX technologies, which support leading-edge semiconductor manufacturing through higher throughput and yield improvements. Advanced Energy is also expanding its manufacturing footprint and capacity to boost rising demand across semiconductor and data center markets.
Meanwhile, MKS benefits from broad exposure to semiconductor and electronics packaging markets. The company is seeing strong momentum in DRAM, logic and foundry applications, supported by rising investments in AI infrastructure and high-bandwidth memory. MKS is also gaining from growing packaging complexity as AI applications increase demand for advanced PCB, chemistry and packaging solutions.
KLA operates differently within the semiconductor value chain, focusing primarily on process control, inspection and metrology solutions. Rising advanced packaging demand, increasing chip complexity and higher process control intensity continue to support KLA’s positioning in leading-edge semiconductor manufacturing.
Overall, KLA benefits from growing demand for process control solutions, Advanced Energy gains from rising adoption of power technologies in semiconductor and AI infrastructure markets, while MKS leverages broad semiconductor and advanced packaging exposure, creating distinct positioning across the semiconductor ecosystem.
KLAC Stock’s Price Performance & Valuation Trend
Shares of this California-based equipment manufacturer have appreciated 68.4% year to date, outperforming the Zacks Electronics - Miscellaneous Products industry, the Zacks Computer & Technology sector and the S&P 500 Index.
Image Source: Zacks Investment Research
KLAC stock is currently trading at a premium compared with its industry peers, with a forward 12-month price-to-earnings (P/E) ratio of 41.88, as shown in the chart below.
Image Source: Zacks Investment Research
Earnings Estimate Trend of KLAC
For fiscal 2026 and 2027, the Zacks Consensus Estimate for KLAC’s earnings has moved up over the past 60 days by 1.2% and 5.1%, respectively. The estimated figures for fiscal 2026 and 2027 reflect year-over-year increases of 11.4% and 34.3%, respectively.
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.