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.
Can Advanced Packaging Demand Drive KLAC's Next Growth Phase?
Read MoreHide Full Article
Key Takeaways
KLAC expects advanced packaging revenues to exceed $1.1 billion in 2026, up over 70% year over year.
KLAC sees rising demand for laser scanning and Gen 4 tools as chip designs become more complex.
KLAC expects advanced packaging growth to outpace the market in 2027, despite supply constraints.
KLA Corporation (KLAC - Free Report) is seeing strong demand for its process control products as AI infrastructure investment increases the need for advanced semiconductors. As chips become more complex, manufacturers need better inspection and measurement tools to identify defects and improve production yields. Advanced packaging is becoming an important growth driver for KLAC, as new chip designs require more sophisticated manufacturing processes.
KLAC expects revenues from its advanced packaging process control systems to reach approximately $1.1 billion or more in 2026, suggesting growth of more than 70% year over year. This is nearly twice the expected growth rate of the advanced packaging market. The company is benefiting from the growing use of advanced packaging in AI infrastructure. Packaging technologies are also adopting more complex wafer manufacturing processes, which increase the need for KLAC's inspection and measurement solutions.
Demand for more advanced inspection tools is also increasing. Hybrid bonding and complex logic devices require higher inspection sensitivity to identify smaller defects. KLAC is seeing demand shift toward more advanced systems, including laser scanning and Gen 4 tools, while its macro inspection products continue to serve as key solutions. The company believes its existing technology portfolio and research and development investments position it well to meet these changing customer needs.
Looking ahead, KLAC expects its advanced packaging business to continue growing faster than the market in 2027. Strong AI infrastructure investment and rising chip complexity should support demand for its process control solutions. As of now, the company will need to manage supply constraints and increase production capacity to meet customer requirements. Overall, advanced packaging is emerging as an important growth driver for KLAC and could support its broader growth outlook over the next few years.
KLAC Faces Tough Competition
Onto Innovation (ONTO - Free Report) is seeing strong demand for its advanced packaging inspection and metrology solutions as AI chip designs become more complex. In the second quarter of 2026, Onto Innovation's revenues increased 35% year over year to $343 million, while its inspection business grew 30% sequentially, driven by 2.5D logic and high-bandwidth memory applications. The company raised its 2026 advanced packaging growth outlook to approximately 80%, up from its previous expectation of 50%.
Applied Materials (AMAT - Free Report) is also benefiting from increased investment in advanced packaging. The company expects its packaging revenues to grow more than 70% in 2026, supported by demand for HBM, 3D chiplet stacking and AI-related semiconductor technologies. Applied Materials is expanding its portfolio with new plating, chemical mechanical planarization and e-beam systems for advanced packaging. It also expects its process diagnostics and control business, which includes inspection and metrology solutions, to grow more than 50% in 2026 as chipmakers focus on improving production yields and output.
Shares of KLA Corporation have risen 37.8% year to date compared with the broader Zacks Computer and Technology sector’s 17.4% growth.
KLAC Stock’s YTD Price Performance
Image Source: Zacks Investment Research
KLAC stock is trading at a premium, with forward 12-month price/earnings of 28.68X compared with the broader sector’s 19.39X. KLA Corporation has a Value Score of D.
KLAC’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for KLA Corporation’s fiscal 2027 earnings is currently pegged at $5.44 per share, up by 2 cents over the past 30 days, suggesting 44.7% growth.
View the Zacks #1 Rank List
Image: Bigstock
Can Advanced Packaging Demand Drive KLAC's Next Growth Phase?
Key Takeaways
KLA Corporation (KLAC - Free Report) is seeing strong demand for its process control products as AI infrastructure investment increases the need for advanced semiconductors. As chips become more complex, manufacturers need better inspection and measurement tools to identify defects and improve production yields. Advanced packaging is becoming an important growth driver for KLAC, as new chip designs require more sophisticated manufacturing processes.
KLAC expects revenues from its advanced packaging process control systems to reach approximately $1.1 billion or more in 2026, suggesting growth of more than 70% year over year. This is nearly twice the expected growth rate of the advanced packaging market. The company is benefiting from the growing use of advanced packaging in AI infrastructure. Packaging technologies are also adopting more complex wafer manufacturing processes, which increase the need for KLAC's inspection and measurement solutions.
Demand for more advanced inspection tools is also increasing. Hybrid bonding and complex logic devices require higher inspection sensitivity to identify smaller defects. KLAC is seeing demand shift toward more advanced systems, including laser scanning and Gen 4 tools, while its macro inspection products continue to serve as key solutions. The company believes its existing technology portfolio and research and development investments position it well to meet these changing customer needs.
Looking ahead, KLAC expects its advanced packaging business to continue growing faster than the market in 2027. Strong AI infrastructure investment and rising chip complexity should support demand for its process control solutions. As of now, the company will need to manage supply constraints and increase production capacity to meet customer requirements. Overall, advanced packaging is emerging as an important growth driver for KLAC and could support its broader growth outlook over the next few years.
KLAC Faces Tough Competition
Onto Innovation (ONTO - Free Report) is seeing strong demand for its advanced packaging inspection and metrology solutions as AI chip designs become more complex. In the second quarter of 2026, Onto Innovation's revenues increased 35% year over year to $343 million, while its inspection business grew 30% sequentially, driven by 2.5D logic and high-bandwidth memory applications. The company raised its 2026 advanced packaging growth outlook to approximately 80%, up from its previous expectation of 50%.
Applied Materials (AMAT - Free Report) is also benefiting from increased investment in advanced packaging. The company expects its packaging revenues to grow more than 70% in 2026, supported by demand for HBM, 3D chiplet stacking and AI-related semiconductor technologies. Applied Materials is expanding its portfolio with new plating, chemical mechanical planarization and e-beam systems for advanced packaging. It also expects its process diagnostics and control business, which includes inspection and metrology solutions, to grow more than 50% in 2026 as chipmakers focus on improving production yields and output.
KLAC’s Share Price Performance, Valuation & Estimates
Shares of KLA Corporation have risen 37.8% year to date compared with the broader Zacks Computer and Technology sector’s 17.4% growth.
KLAC Stock’s YTD Price Performance
Image Source: Zacks Investment Research
KLAC stock is trading at a premium, with forward 12-month price/earnings of 28.68X compared with the broader sector’s 19.39X. KLA Corporation has a Value Score of D.
KLAC’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for KLA Corporation’s fiscal 2027 earnings is currently pegged at $5.44 per share, up by 2 cents over the past 30 days, suggesting 44.7% growth.
Image Source: Zacks Investment Research
KLA Corporation currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.