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.
The company’s shares have also outperformed its peers, which include ASML Holding (ASML - Free Report) , Advanced Energy (AEIS - Free Report) and Entegris (ENTG - Free Report) . All three companies are expanding their footprint in the semiconductor industry. ASML Holding, Advanced Energy and Entegris shares have soared 63.4%, 37.3% and 61.8%, respectively, over the past year.
The outperformance can be attributed to strong semiconductor demand, driven by accelerating investments in artificial intelligence (AI) infrastructure, leading-edge foundry/logic, memory and advanced packaging. In the fourth quarter of fiscal 2026, revenues reached a record $3.66 billion, increasing 15% year over year and 7% sequentially. Management attributed the performance to rising AI infrastructure investments and greater process-control intensity across memory and advanced packaging. These factors are helping KLAC fend off its competitors such as ASML Holding, Advanced Energy and Entegris.
KLA Stock Performance
Image Source: Zacks Investment Research
KLAC Benefits From Strong Semiconductor Demand
KLAC is benefiting from accelerating investments in semiconductor manufacturing equipment, driven by rising AI computing requirements, growing adoption of high-bandwidth memory (HBM) and increasing complexity in leading-edge chip manufacturing. The company’s strong position in semiconductor process control, wafer inspection and metrology solutions has been a major growth driver.
In the fourth quarter of fiscal 2026, Semiconductor Process Control revenues rose 13% to $3.26 billion, accounting for approximately 89% of total revenues. The segment benefited from continued investments in leading-edge manufacturing and increasing process control intensity across advanced semiconductor technologies.
AI infrastructure remains a major growth catalyst. Increasing AI compute requirements, hyperscale data-center investments, HBM adoption and sophisticated packaging architectures require tighter process control to improve yields and accelerate production ramps. KLA highlighted that customer demand signals have strengthened materially, while visibility continues to improve. The company expects business momentum to accelerate through the second half of 2026 and significant growth to continue in 2027.
Advanced packaging provides another significant growth opportunity. KLA now expects advanced packaging process-control systems revenues to reach approximately $1.1 billion in calendar 2026, representing growth of more than 70% year over year and exceeding its previous expectation of high-50% growth. Meanwhile, Specialty Process, PCB and Component Inspection businesses are expected to grow more than 25% in calendar year 2026, supported by high-performance computing and greater package complexity.
The broader semiconductor equipment environment also remains favorable. KLA raised its calendar year 2026 wafer fabrication equipment market estimate, including advanced packaging, to the low-$150-billion range from its previous expectation of more than $140 billion. Broad-based investment across leading-edge logic, foundry, DRAM, HBM, NAND and advanced packaging is expected to sustain capacity expansion. KLA expects second-half 2026 revenues to increase roughly 20% from the first half.
KLAC is benefiting from a rapidly expanding backlog, driven by accelerating AI infrastructure investments and robust demand for advanced semiconductor manufacturing equipment.
KLA’s backlog stood at about $12.6 billion, up roughly 60% from fiscal 2025, while the company said the order funnel remains strong. Customer shipment visibility extends through 2027 and, in some cases, into early 2028. Orders generally cover a 12–18-month delivery window, giving investors better visibility into future revenue despite the industry's cyclicality.
KLA Issues Strong First-Quarter Outlook
KLAC’s strong exposure to AI-driven semiconductor investments is expected to benefit the company’s top-line growth.
For the first quarter of fiscal 2027, KLA expects revenues of $4 billion (plus or minus $200 million). Non-GAAP earnings are projected to be $1.16 per share (plus or minus 10 cents). Foundry/logic is expected to account for about 73% of Semiconductor Process Control systems revenues to semiconductor customers, with memory at roughly 27%. Within memory, DRAM is projected to be about 90% and NAND at 10%. Non-GAAP operating expenses are anticipated to be approximately $690 million.
The Zacks Consensus Estimate for KLAC’s fiscal first-quarter 2027 revenues is pegged at $4.05 billion, suggesting growth of 26.09% year over year.
The Zacks Consensus Estimate for fiscal first-quarter 2027 earnings is pegged at $1.18 per share, which has been unchanged over the past 30 days. This indicates 34.09% growth over the year-ago quarter’s reported figure.
KLAC shares are trading at a premium, as suggested by the Value Score of D.
In terms of the forward 12-month price/sales, KLAC is trading at 12.37X, higher than the broader sector’s 6.03X.
KLA Valuation
Image Source: Zacks Investment Research
Conclusion
KLA’s strong position in semiconductor process control, expanding AI-driven demand, growing advanced packaging opportunities and robust backlog support its long-term growth prospects. The company’s strong outlook and improving revenue visibility reinforce its positive growth trajectory. These factors justify the premium valuation.
View the Zacks #1 Rank List
Image: Bigstock
KLAC Surges 64.5% in a Year: Should You Buy, Sell, or Hold the Stock?
Key Takeaways
KLA (KLAC - Free Report) shares have surged 64.5% over the past year, outperforming the broader Zacks Computer and Technology sector increase of 25.6% and the Zacks Electronics - Miscellaneous Products industry rise of 32.5%.
The company’s shares have also outperformed its peers, which include ASML Holding (ASML - Free Report) , Advanced Energy (AEIS - Free Report) and Entegris (ENTG - Free Report) . All three companies are expanding their footprint in the semiconductor industry. ASML Holding, Advanced Energy and Entegris shares have soared 63.4%, 37.3% and 61.8%, respectively, over the past year.
The outperformance can be attributed to strong semiconductor demand, driven by accelerating investments in artificial intelligence (AI) infrastructure, leading-edge foundry/logic, memory and advanced packaging. In the fourth quarter of fiscal 2026, revenues reached a record $3.66 billion, increasing 15% year over year and 7% sequentially. Management attributed the performance to rising AI infrastructure investments and greater process-control intensity across memory and advanced packaging. These factors are helping KLAC fend off its competitors such as ASML Holding, Advanced Energy and Entegris.
KLA Stock Performance
Image Source: Zacks Investment Research
KLAC Benefits From Strong Semiconductor Demand
KLAC is benefiting from accelerating investments in semiconductor manufacturing equipment, driven by rising AI computing requirements, growing adoption of high-bandwidth memory (HBM) and increasing complexity in leading-edge chip manufacturing. The company’s strong position in semiconductor process control, wafer inspection and metrology solutions has been a major growth driver.
In the fourth quarter of fiscal 2026, Semiconductor Process Control revenues rose 13% to $3.26 billion, accounting for approximately 89% of total revenues. The segment benefited from continued investments in leading-edge manufacturing and increasing process control intensity across advanced semiconductor technologies.
AI infrastructure remains a major growth catalyst. Increasing AI compute requirements, hyperscale data-center investments, HBM adoption and sophisticated packaging architectures require tighter process control to improve yields and accelerate production ramps. KLA highlighted that customer demand signals have strengthened materially, while visibility continues to improve. The company expects business momentum to accelerate through the second half of 2026 and significant growth to continue in 2027.
Advanced packaging provides another significant growth opportunity. KLA now expects advanced packaging process-control systems revenues to reach approximately $1.1 billion in calendar 2026, representing growth of more than 70% year over year and exceeding its previous expectation of high-50% growth. Meanwhile, Specialty Process, PCB and Component Inspection businesses are expected to grow more than 25% in calendar year 2026, supported by high-performance computing and greater package complexity.
The broader semiconductor equipment environment also remains favorable. KLA raised its calendar year 2026 wafer fabrication equipment market estimate, including advanced packaging, to the low-$150-billion range from its previous expectation of more than $140 billion. Broad-based investment across leading-edge logic, foundry, DRAM, HBM, NAND and advanced packaging is expected to sustain capacity expansion. KLA expects second-half 2026 revenues to increase roughly 20% from the first half.
KLAC’s Expanding Backlog Strengthens Growth Prospects
KLAC is benefiting from a rapidly expanding backlog, driven by accelerating AI infrastructure investments and robust demand for advanced semiconductor manufacturing equipment.
KLA’s backlog stood at about $12.6 billion, up roughly 60% from fiscal 2025, while the company said the order funnel remains strong. Customer shipment visibility extends through 2027 and, in some cases, into early 2028. Orders generally cover a 12–18-month delivery window, giving investors better visibility into future revenue despite the industry's cyclicality.
KLA Issues Strong First-Quarter Outlook
KLAC’s strong exposure to AI-driven semiconductor investments is expected to benefit the company’s top-line growth.
For the first quarter of fiscal 2027, KLA expects revenues of $4 billion (plus or minus $200 million). Non-GAAP earnings are projected to be $1.16 per share (plus or minus 10 cents). Foundry/logic is expected to account for about 73% of Semiconductor Process Control systems revenues to semiconductor customers, with memory at roughly 27%. Within memory, DRAM is projected to be about 90% and NAND at 10%. Non-GAAP operating expenses are anticipated to be approximately $690 million.
The Zacks Consensus Estimate for KLAC’s fiscal first-quarter 2027 revenues is pegged at $4.05 billion, suggesting growth of 26.09% year over year.
The Zacks Consensus Estimate for fiscal first-quarter 2027 earnings is pegged at $1.18 per share, which has been unchanged over the past 30 days. This indicates 34.09% growth over the year-ago quarter’s reported figure.
KLA Corporation Price and Consensus
KLA Corporation price-consensus-chart | KLA Corporation Quote
KLA Shares Trade at a Premium
KLAC shares are trading at a premium, as suggested by the Value Score of D.
In terms of the forward 12-month price/sales, KLAC is trading at 12.37X, higher than the broader sector’s 6.03X.
KLA Valuation
Image Source: Zacks Investment Research
Conclusion
KLA’s strong position in semiconductor process control, expanding AI-driven demand, growing advanced packaging opportunities and robust backlog support its long-term growth prospects. The company’s strong outlook and improving revenue visibility reinforce its positive growth trajectory. These factors justify the premium valuation.
KLA currently has a Zacks Rank #2 (Buy), which implies investors should buy the stock right now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.