We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will Dragonfly G5 Momentum Sustain ONTO's Growth Engine?
Read MoreHide Full Article
Key Takeaways
Onto Innovation's Dragonfly G5 is expanding its role in advanced packaging for AI applications.
Dragonfly orders exceed $200 million from one OSAT, with most of the orders slated for 2027.
ONTO raised its 2026 advanced-packaging growth outlook to at least 80% from more than 50%.
AI, HBM, chiplet architectures and advanced packaging are shaping the semiconductor equipment industry. For Onto Innovation, Inc. (ONTO - Free Report) , these trends are creating an opportunity to expand beyond traditional process-control applications. At the center of that opportunity is the Dragonfly G5 inspection platform. After moving from product launch and customer evaluations into qualifications and volume orders, Dragonfly G5 is steadily contributing to ONTO’s advanced-packaging strategy.
AI accelerators increasingly use 2.5D/3D architectures, HBM, chiplets and advanced interconnects, driving greater packaging complexity and demand for sophisticated inspection and metrology to protect yields. ONTO generated $343.1 million of quarterly revenue, up 35.3% year over year. Its inspection business, dominated by Dragonfly systems, grew approximately 30% sequentially, led by demand from both 2.5D logic and HBM applications.
ONTO launched Dragonfly G5 in March 2026, positioning it as a major upgrade to its inspection and metrology capabilities. Following the successful launch, ONTO saw strong demand in the second quarter and raised its full-year advanced packaging growth outlook to approximately 80% from 50%. Demand is strongest among HBM manufacturers and AI-focused OSATs, including more than $200 million in Dragonfly orders from a single OSAT, most slated for 2027. The bullish case strengthened in April when Onto Innovation disclosed that Dragonfly G5 had been qualified for 2.5D AI packaging applications. Management also noted that demand for the Dragonfly platform is expected to grow more than 50% in 2026 from 2025.
Reflecting a wider customer base and application set, management raised its full-year 2026 advanced-packaging growth outlook to at least 80% from more than 50% previously and expects further growth in 2027, with no signs of customer overcapacity.
Rising Competition Puts ONTO’s Technology Edge to the Test
KLA Corporation (KLAC - Free Report) remains positioned to outperform as AI infrastructure spending broadens demand for process control across leading-edge logic, memory and advanced packaging. KLA’s product breadth and customer collaboration continue to support market share expansion. Per management, the company has gained process control share over the last several years and expects further gains as advanced logic and packaging require more capability. Advanced packaging is also moving toward front-end-like processing and hybrid bonding, which tightens defect requirements and broadens the addressable market for KLA’s higher-end tools. KLA now expects 2026 wafer fabrication equipment spending in the low-$150 billion range, up from $135-$140 billion.
Applied Materials (AMAT - Free Report) is benefiting from AI-driven investment that is concentrating wafer fabrication spending in leading-edge foundry-logic, DRAM and advanced packaging, where its materials engineering portfolio has broad exposure. In June, AMAT introduced new chipmaking systems for DRAM and advanced packaging, helping customers improve memory performance, HBM integration and 3D chip manufacturing for next-generation AI applications. Applied Materials now expects advanced packaging revenue to grow more than 70% in 2026, up from its prior outlook of more than 50%. It is extending its portfolio across HBM and 3D chiplet stacking with Nokota VMax 2 plating, Opta Quad CMP and two new eBeam systems for metrology and defect analysis.
ONTO Price Performance, Valuation and Estimates
ONTO’s shares have soared 119.3% in the past year compared with the Zacks Nanotechnology industry’s growth of 121.3% as well as the Zacks Computer and Technology sector and the S&P 500 composite’s rise of 26.1% and 16.8%, respectively.
Image Source: Zacks Investment Research
In terms of forward price/earnings, ONTO’s shares are trading at 26.04X, higher than the industry’s 5.1X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for ONTO has moved up for both 2026 and 2027 over the past 60 days.
View the Zacks #1 Rank List
Image: Bigstock
Will Dragonfly G5 Momentum Sustain ONTO's Growth Engine?
Key Takeaways
AI, HBM, chiplet architectures and advanced packaging are shaping the semiconductor equipment industry. For Onto Innovation, Inc. (ONTO - Free Report) , these trends are creating an opportunity to expand beyond traditional process-control applications. At the center of that opportunity is the Dragonfly G5 inspection platform. After moving from product launch and customer evaluations into qualifications and volume orders, Dragonfly G5 is steadily contributing to ONTO’s advanced-packaging strategy.
AI accelerators increasingly use 2.5D/3D architectures, HBM, chiplets and advanced interconnects, driving greater packaging complexity and demand for sophisticated inspection and metrology to protect yields. ONTO generated $343.1 million of quarterly revenue, up 35.3% year over year. Its inspection business, dominated by Dragonfly systems, grew approximately 30% sequentially, led by demand from both 2.5D logic and HBM applications.
ONTO launched Dragonfly G5 in March 2026, positioning it as a major upgrade to its inspection and metrology capabilities. Following the successful launch, ONTO saw strong demand in the second quarter and raised its full-year advanced packaging growth outlook to approximately 80% from 50%. Demand is strongest among HBM manufacturers and AI-focused OSATs, including more than $200 million in Dragonfly orders from a single OSAT, most slated for 2027. The bullish case strengthened in April when Onto Innovation disclosed that Dragonfly G5 had been qualified for 2.5D AI packaging applications. Management also noted that demand for the Dragonfly platform is expected to grow more than 50% in 2026 from 2025.
Reflecting a wider customer base and application set, management raised its full-year 2026 advanced-packaging growth outlook to at least 80% from more than 50% previously and expects further growth in 2027, with no signs of customer overcapacity.
Rising Competition Puts ONTO’s Technology Edge to the Test
KLA Corporation (KLAC - Free Report) remains positioned to outperform as AI infrastructure spending broadens demand for process control across leading-edge logic, memory and advanced packaging. KLA’s product breadth and customer collaboration continue to support market share expansion. Per management, the company has gained process control share over the last several years and expects further gains as advanced logic and packaging require more capability. Advanced packaging is also moving toward front-end-like processing and hybrid bonding, which tightens defect requirements and broadens the addressable market for KLA’s higher-end tools. KLA now expects 2026 wafer fabrication equipment spending in the low-$150 billion range, up from $135-$140 billion.
Applied Materials (AMAT - Free Report) is benefiting from AI-driven investment that is concentrating wafer fabrication spending in leading-edge foundry-logic, DRAM and advanced packaging, where its materials engineering portfolio has broad exposure. In June, AMAT introduced new chipmaking systems for DRAM and advanced packaging, helping customers improve memory performance, HBM integration and 3D chip manufacturing for next-generation AI applications. Applied Materials now expects advanced packaging revenue to grow more than 70% in 2026, up from its prior outlook of more than 50%. It is extending its portfolio across HBM and 3D chiplet stacking with Nokota VMax 2 plating, Opta Quad CMP and two new eBeam systems for metrology and defect analysis.
ONTO Price Performance, Valuation and Estimates
ONTO’s shares have soared 119.3% in the past year compared with the Zacks Nanotechnology industry’s growth of 121.3% as well as the Zacks Computer and Technology sector and the S&P 500 composite’s rise of 26.1% and 16.8%, respectively.
Image Source: Zacks Investment Research
In terms of forward price/earnings, ONTO’s shares are trading at 26.04X, higher than the industry’s 5.1X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for ONTO has moved up for both 2026 and 2027 over the past 60 days.
Image Source: Zacks Investment Research
Onto Innovation currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.