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1. Company Snapshot

1.a. Company Description

KLA Corporation designs, manufactures, and markets process control, process-enabling, and yield management solutions for the semiconductor and related electronics industries worldwide.It operates through four segments: Semiconductor Process Control; Specialty Semiconductor Process; PCB, Display and Component Inspection; and Other.The company offers integrated circuit (IC) manufacturing products that comprises wafer inspection and review, and metrology; wafer and substrate defect inspection and metrology; reticle defect inspection and metrology; chemical/materials quality analysis; in situ process management and wafer handling diagnostics for IC and original equipment manufacturer (OEM) manufacturing; software products to provide run-time process control, defect excursion identification, process corrections, and defect classification; and refurbished and remanufactured products.


It also provides specialty semiconductor manufacturing, benchtop metrology, surface characterization, and electrical property measurement services for general purpose/ lab applications; etch, plasma dicing, deposition, and other wafer processing technologies and solutions for the semiconductor and microelectronics industry.In addition, the company offers direct imaging, inspection, optical shaping, additive printing, and computer-aided manufacturing and engineering solutions for the PCB market; inspection and electrical testing systems to identify and classify defects, as well as systems to repair defects for the display market; and inspection and metrology systems for quality control and yield improvement in advanced and traditional semiconductor packaging markets.The company was formerly known as KLA-Tencor Corporation and changed its name to KLA Corporation in July 2019.


KLA Corporation was incorporated in 1975 and is headquartered in Milpitas, California.

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1.b. Last Insights on KLAC

KLA Corporation's recent performance was driven by strong quarterly earnings, beating estimates with $9.38 per share, a 24% revenue jump, and a promising new deal in the chip industry. The company's advanced packaging surge and AI momentum also contributed positively. Additionally, KLA broke through the 20-day moving average, suggesting a short-term bullish trend. A recent investment by CCM Investment Advisers, acquiring 11,189 shares, further supports the stock. Its process control and yield management solutions for semiconductor industries remain a key growth driver.

1.c. Company Highlights

2. KLA's Strong Q3 2025 Earnings: Is the Growth Sustainable?

KLA reported a robust September quarter with revenue of $3.21 billion and non-GAAP diluted EPS of $8.81, beating analyst estimates of $8.63. The company's gross margin was 50 basis points above the midpoint of guidance, driven by favorable product mix and operational efficiency. With a P/E Ratio of 37.77 and an EV/EBITDA of 30.53, investors are pricing in significant growth expectations. The company's return on equity (ROE) stands at 98.15%, indicating strong profitability.

Publication Date: Oct -31

📋 Highlights
  • Revenue & EPS Performance:: September quarterly revenue reached $3.21 billion with non-GAAP diluted EPS of $8.81, exceeding guidance midpoints.
  • Advanced Packaging Growth:: Revenue from advanced packaging is projected to exceed $925 million in 2025, a 70% year-over-year increase.
  • Service Business Expansion:: Services revenue hit $745 million in Q3, reflecting 6% sequential and 16% annual growth, with 12-14% growth expected in 2025.
  • China Market Normalization:: China’s revenue contribution is expected to stabilize to 30% (±) in 2026, down from 39% in September, with $300–$350 million lost due to export controls by 2026.
  • 2026 Outlook:: Advanced packaging revenue growth is anticipated to outpace 20%, driven by AI and HBM demand, while WFE growth is forecasted at mid- to high-single digits in 2026.

Drivers of Growth

KLA's growth is driven by increasing demand for process control and AI infrastructure investment, as well as momentum in advanced packaging. The company's leading-edge customers are challenged to optimize yield and limit process variability in high-volume production environments, resulting in increasing process control intensity. As Rick Wallace stated, "KLA's business is benefiting from the growing relevance of process control and AI infrastructure investment, as well as momentum in advanced packaging."

Advanced Packaging and Service Growth

The company expects advanced packaging related revenue to exceed $925 million in 2025, up approximately 70% year-over-year. KLA's service business also continues to deliver strong growth, with services growing to $745 million in the September quarter, up 6% sequentially and 16% year-over-year. Service growth is expected to remain in the range of 12-14% in 2026, driven by the complexity of its systems and increasing demand for high-bandwidth memory.

Outlook for 2026

KLA expects mid- to high single-digit growth in WFE in 2026, driven by increasing investment in leading-edge logic, HBM, and advanced packaging. The company is optimistic about its growth prospects, with the first half of 2026 expected to be flat to slightly up, and the second half showing growth acceleration. Advanced logic and DRAM are expected to drive growth, with the DRAM market experiencing a surge in demand.

Valuation and Risks

With a P/S Ratio of 12.8 and an ROIC of 37.43%, KLA's valuation reflects its strong growth profile. However, investors should be cautious about potential risks, including the impact of export controls and tariffs on the company's gross margins. The recent export controls are expected to result in lost business of $300-350 million by the end of 2026, but the impact is considered immaterial to the company overall.

3. NewsRoom

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KLA Corporation (KLAC) Presents at UBS Global Technology and AI Conference 2025 Transcript

Dec -03

Source: seekingalpha.com

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Applied Materials Stock Pops After UBS Upgrade and Street-High DRAM Forecast

Nov -25

Source: gurufocus.com

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KLA (NASDAQ:KLAC) vs. Elong Power (NASDAQ:ELPW) Financial Comparison

Nov -23

Source: defenseworld.net

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Why KLA Stock Could Be A Buy

Nov -21

Source: forbes.com

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3 Under-the-Radar AI Stocks to Buy on the Dip

Nov -15

Source: marketbeat.com

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Touchstone Dividend Equity Fund Q3 2025 Portfolio Review

Nov -13

Source: seekingalpha.com

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Bloomberg Watch Shows 5 Ideal "Safer" November Dividend Dogs

Nov -12

Source: seekingalpha.com

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PRIMECAP Management's Strategic Moves: Hess Corp Exit and Chevron Corp Addition

Nov -12

Source: gurufocus.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (9.53%)

6. Segments

Semiconductor Process Control

Expected Growth: 9.5%

The 9.5% growth in Semiconductor Process Control from KLA Corporation is driven by increasing demand for advanced nodes, rising complexity in chip manufacturing, and the need for precise process control. Additionally, the growing adoption of AI, 5G, and IoT technologies is fueling the requirement for high-performance semiconductors, thereby driving growth in this segment.

PCB and Component Inspection

Expected Growth: 8.5%

KLA Corporation's PCB and Component Inspection segment growth of 8.5% is driven by increasing demand for advanced electronics, rising complexity in PCB manufacturing, and the need for precise inspection solutions. The growth is also fueled by the adoption of Industry 4.0 and the requirement for high-quality, reliable electronics in emerging applications such as 5G, AI, and IoT.

Specialty Semiconductor Process

Expected Growth: 11.0%

The Specialty Semiconductor Process segment growth of 11.0% is driven by increasing demand for specialized chips, advancements in semiconductor technology, and KLA Corporation's strong portfolio of process control solutions. Growth is also fueled by the expanding applications of specialty semiconductors in emerging markets, such as artificial intelligence, 5G, and the Internet of Things (IoT).

Corporate Allocations and Effects of Changes in Foreign Currency Exchange Rates

Expected Growth: 0.0%

KLA Corporation's 0.0% growth is driven by corporate allocations and foreign currency exchange rates. The company's strategic resource allocation and prudent management of currency fluctuations likely offset potential gains, resulting in a neutral growth rate. This stability reflects KLA's adaptability in navigating complex global market dynamics.

7. Detailed Products

Process Control and Metrology

KLA's process control and metrology products include advanced inspection and metrology systems that enable semiconductor manufacturers to monitor and control their manufacturing processes in real-time.

Yield Management

KLA's yield management products provide a comprehensive software platform for data analysis and management, enabling semiconductor manufacturers to track and analyze yield-related data across multiple fabs and production lines.

Virtual metrology and Defect Review

KLA's Virtual metrology and Defect Review products leverage AI/ML and computer vision to enable advanced defect detection, classification and dispositioning.

Reticle and Mask Inspection

KLA's reticle and mask inspection products are designed to detect defects on reticles and masks used in the semiconductor manufacturing process.

Wafer Inspection

KLA's wafer inspection products include advanced systems for detecting defects on silicon wafers, including both patterned and unpatterned wafer inspection.

Optical Inspection

KLA's optical inspection products use advanced optics and imaging technology to detect defects on silicon wafers and other semiconductor materials.

8. KLA Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

KLA Corporation operates in the semiconductor industry, providing process control and yield management solutions. The threat of substitutes is relatively low due to the high specificity of their products and the critical nature of their role in the semiconductor manufacturing process. Customers have limited alternatives for the precise monitoring and control of semiconductor fabrication processes.

Bargaining Power Of Customers

The customers of KLA Corporation, primarily semiconductor manufacturers, have significant demands for high-quality, precise, and reliable process control and yield management solutions. However, given the critical and specialized nature of KLA's products, their bargaining power is somewhat mitigated. Customers rely heavily on KLA's expertise and products, which balances their negotiating power.

Bargaining Power Of Suppliers

The semiconductor industry supply chain is complex, but KLA Corporation, being a major player, likely has significant negotiating power with its suppliers. The company sources a wide range of components and materials, but its scale and market position allow it to manage supplier relationships effectively, potentially reducing the bargaining power of suppliers.

Threat Of New Entrants

The threat of new entrants in the semiconductor equipment and process control sector is relatively low. High barriers to entry exist due to the significant research and development costs, the need for highly specialized knowledge, and the stringent requirements of the semiconductor manufacturing process. KLA Corporation's established market presence and technological expertise further discourage new entrants.

Intensity Of Rivalry

The semiconductor industry is highly competitive, with several major players competing for market share. KLA Corporation faces strong competition from companies like Applied Materials and Lam Research. The high level of competition, driven by similar products, the quest for technological advancements, and the critical nature of the solutions provided, makes the intensity of rivalry high.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 66.94%
Debt Cost 5.27%
Equity Weight 33.06%
Equity Cost 10.99%
WACC 7.16%
Leverage 202.46%

11. Quality Control: KLA Corporation passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Lam Research

A-Score: 5.5/10

Value: 0.8

Growth: 8.1

Quality: 8.3

Yield: 2.0

Momentum: 9.0

Volatility: 4.7

1-Year Total Return ->

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Stock-Card
KLA

A-Score: 5.4/10

Value: 0.8

Growth: 8.4

Quality: 7.9

Yield: 2.0

Momentum: 8.5

Volatility: 5.0

1-Year Total Return ->

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Stock-Card
Broadcom

A-Score: 5.4/10

Value: 0.0

Growth: 7.6

Quality: 8.1

Yield: 3.0

Momentum: 9.5

Volatility: 4.0

1-Year Total Return ->

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Stock-Card
Applied Materials

A-Score: 4.9/10

Value: 1.6

Growth: 8.1

Quality: 8.1

Yield: 2.0

Momentum: 5.0

Volatility: 4.7

1-Year Total Return ->

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Stock-Card
Texas Instruments

A-Score: 4.5/10

Value: 1.5

Growth: 3.6

Quality: 6.9

Yield: 6.0

Momentum: 3.0

Volatility: 6.0

1-Year Total Return ->

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Stock-Card
Microchip Technology

A-Score: 3.3/10

Value: 2.9

Growth: 1.9

Quality: 3.6

Yield: 5.0

Momentum: 2.5

Volatility: 4.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

1208.08$

Current Price

1208.08$

Potential

-0.00%

Expected Cash-Flows