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KLAC's Backlog Surges on AI Demand: Can It Outpace AMAT & ASML?
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Key Takeaways
KLAC's backlog climbed to $12.57B, driven mainly by demand tied to the AI infrastructure buildout.
KLAC expects second-half 2026 revenues to rise about 20% from the first half as supply improves.
Advanced-packaging process-control revenues are expected to reach about $1.1B in 2026, up more than 70%.
KLA Corporation (KLAC - Free Report) is benefiting from a strong backlog and improving semiconductor equipment demand, supported by accelerating Artificial Intelligence (AI) infrastructure investments and rising spending across leading-edge chip manufacturing. KLAC’s backlog increased to $12.57 billion at the end of fiscal 2026 from $7.86 billion a year earlier, primarily driven by demand tied to the AI infrastructure buildout. The strong order pipeline improves revenue visibility and positions KLAC to capitalize on continued investments in foundry/logic, memory and advanced packaging, while strengthening its competitive position against Applied Materials (AMAT - Free Report) and ASML Holding (ASML - Free Report) .
The broader semiconductor equipment environment is also strengthening. In the fourth quarter of fiscal 2026, KLAC raised its calendar 2026 wafer fabrication equipment market expectation, including advanced packaging, to the low-$150-billion range, up from its earlier view of more than $140 billion and compared with roughly $120 billion in calendar 2025. Management expects broad-based investments across leading-edge logic, foundry, DRAM, high-bandwidth memory (HBM), NAND and advanced packaging to support continued capacity expansion. KLAC expects second-half calendar 2026 revenues to increase roughly 20% from the first half as additional supply becomes available, supporting continued sequential growth into calendar 2027.
Rising semiconductor complexity is increasing demand for KLAC’s inspection, metrology and yield-management solutions. Management expects its semiconductor process-control business to grow at least a few percentage points faster than the overall company as high-performance computing becomes a larger portion of semiconductor spending. KLAC also expects several new greenfield fabs in 2027, creating demand not only for technology upgrades but also for incremental equipment installations. Broadening logic investment, continued HBM adoption, advanced packaging and new fab construction should therefore expand KLAC’s addressable opportunity.
Advanced packaging provides another important catalyst. KLAC expects advanced-packaging process-control systems revenues to reach approximately $1.1 billion in calendar 2026, up more than 70% year over year, almost twice the growth rate of the advanced-packaging market. Its competitive position is also supported by complex process control, algorithmic expertise and a global network of roughly 1,600-1,700 applications engineers.
KLAC Faces Tough Competition
Applied Materials is benefiting from the same AI-driven semiconductor equipment upcycle. AMAT expects leading-edge foundry/logic, DRAM and advanced packaging to account for roughly 80% of wafer fab equipment growth in 2026 and 2027. Its process diagnostics and control business is expected to grow more than 50% in 2026, supported by e-beam and optical inspection demand. Applied Materials is also expanding manufacturing capacity, targeting the ability to double quarterly system output from current levels by 2028, while some customer discussions now extend to 2030.
ASML Holding is likewise benefiting from accelerating capacity additions across logic and memory. In its second-quarter 2026 update, the company expects full-year 2026 advanced foundry/logic revenues to rise about 25%, memory revenues to increase 75% and EUV revenues to grow roughly 45%. ASML also expects DUV, metrology and inspection revenues to increase about 25% in 2026, supported by higher process-control intensity and greater adoption of optical metrology and e-beam inspection. ASML said it was close to receiving the orders required for 2027 and plans to add roughly 30% to its Low-NA EUV capacity in 2027, while investigating another potential 30% capacity increase in 2028. These capacity investments could intensify competitive pressure on KLAC as semiconductor spending and process-control requirements continue to rise.
Shares of KLA Corp. have risen 55.7% year to date compared with the broader Zacks Computer and Technology sector’s 22.6% growth.
KLAC Stock’s Price Performance
Image Source: Zacks Investment Research
KLAC stock is trading at a premium, with forward 12-month price/earnings of 33.24X compared with the broader sector’s 21.27X. KLA Corporation has a Value Score of D.
KLAC’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for KLA Corp.’s earnings is currently pegged at $1.18 per share, unchanged over the past 30 days, suggesting 34.09% year-over-year growth.
View the Zacks #1 Rank List
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KLAC's Backlog Surges on AI Demand: Can It Outpace AMAT & ASML?
Key Takeaways
KLA Corporation (KLAC - Free Report) is benefiting from a strong backlog and improving semiconductor equipment demand, supported by accelerating Artificial Intelligence (AI) infrastructure investments and rising spending across leading-edge chip manufacturing. KLAC’s backlog increased to $12.57 billion at the end of fiscal 2026 from $7.86 billion a year earlier, primarily driven by demand tied to the AI infrastructure buildout. The strong order pipeline improves revenue visibility and positions KLAC to capitalize on continued investments in foundry/logic, memory and advanced packaging, while strengthening its competitive position against Applied Materials (AMAT - Free Report) and ASML Holding (ASML - Free Report) .
The broader semiconductor equipment environment is also strengthening. In the fourth quarter of fiscal 2026, KLAC raised its calendar 2026 wafer fabrication equipment market expectation, including advanced packaging, to the low-$150-billion range, up from its earlier view of more than $140 billion and compared with roughly $120 billion in calendar 2025. Management expects broad-based investments across leading-edge logic, foundry, DRAM, high-bandwidth memory (HBM), NAND and advanced packaging to support continued capacity expansion. KLAC expects second-half calendar 2026 revenues to increase roughly 20% from the first half as additional supply becomes available, supporting continued sequential growth into calendar 2027.
Rising semiconductor complexity is increasing demand for KLAC’s inspection, metrology and yield-management solutions. Management expects its semiconductor process-control business to grow at least a few percentage points faster than the overall company as high-performance computing becomes a larger portion of semiconductor spending. KLAC also expects several new greenfield fabs in 2027, creating demand not only for technology upgrades but also for incremental equipment installations. Broadening logic investment, continued HBM adoption, advanced packaging and new fab construction should therefore expand KLAC’s addressable opportunity.
Advanced packaging provides another important catalyst. KLAC expects advanced-packaging process-control systems revenues to reach approximately $1.1 billion in calendar 2026, up more than 70% year over year, almost twice the growth rate of the advanced-packaging market. Its competitive position is also supported by complex process control, algorithmic expertise and a global network of roughly 1,600-1,700 applications engineers.
KLAC Faces Tough Competition
Applied Materials is benefiting from the same AI-driven semiconductor equipment upcycle. AMAT expects leading-edge foundry/logic, DRAM and advanced packaging to account for roughly 80% of wafer fab equipment growth in 2026 and 2027. Its process diagnostics and control business is expected to grow more than 50% in 2026, supported by e-beam and optical inspection demand. Applied Materials is also expanding manufacturing capacity, targeting the ability to double quarterly system output from current levels by 2028, while some customer discussions now extend to 2030.
ASML Holding is likewise benefiting from accelerating capacity additions across logic and memory. In its second-quarter 2026 update, the company expects full-year 2026 advanced foundry/logic revenues to rise about 25%, memory revenues to increase 75% and EUV revenues to grow roughly 45%. ASML also expects DUV, metrology and inspection revenues to increase about 25% in 2026, supported by higher process-control intensity and greater adoption of optical metrology and e-beam inspection. ASML said it was close to receiving the orders required for 2027 and plans to add roughly 30% to its Low-NA EUV capacity in 2027, while investigating another potential 30% capacity increase in 2028. These capacity investments could intensify competitive pressure on KLAC as semiconductor spending and process-control requirements continue to rise.
KLAC’s Share Price Performance, Valuation & Estimates
Shares of KLA Corp. have risen 55.7% year to date compared with the broader Zacks Computer and Technology sector’s 22.6% growth.
KLAC Stock’s Price Performance
Image Source: Zacks Investment Research
KLAC stock is trading at a premium, with forward 12-month price/earnings of 33.24X compared with the broader sector’s 21.27X. KLA Corporation has a Value Score of D.
KLAC’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for KLA Corp.’s earnings is currently pegged at $1.18 per share, unchanged over the past 30 days, suggesting 34.09% year-over-year growth.
KLA Corp. Price and Consensus
KLA Corporation price-consensus-chart | KLA Corporation Quote
KLA Corp. currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.