Company Reports

KLA is one of the largest providers in the world of wafer fabrication equipment for semiconductors, specializing in process control, where we expect its unmatched breadth and depth to defend and increase its market share. We believe trends toward higher complexity in chips will drive increasing demand and strong pricing for KLA’s equipment, including artificial intelligence and new technologies like high-bandwidth memory. We particularly like that KLA boasts the highest profit margins out of any WFE firm under our coverage.

KLA's strong June-quarter results came in at the high end of guidance. Sales rose 15% year over year to $3.66 billion, and September-quarter guidance implies an acceleration to 25% year-over-year growth at the midpoint. Shares fell 10% after hours as negative momentum in AI tech stocks continues.

KLA conducted a 10-to-1 stock split, effective at the start of trading on June 12. Every existing KLA shareholder will receive nine additional shares of stock.

KLA is one of the largest providers in the world of wafer fabrication equipment for semiconductors, specializing in process control, where we expect its unmatched breadth and depth to defend and increase its market share. We believe trends toward higher complexity in chips will drive increasing demand and strong pricing for KLA’s equipment, including artificial intelligence and new technologies like high-bandwidth memory. We particularly like that KLA boasts the highest profit margins out of any WFE firm under our coverage.

KLA reported good March-quarter results above the midpoints of its guidance and provided a positive June-quarter outlook that fit our model. Shares dropped 9% after hours, likely due to guidance missing the high bar set by peer Lam Research a week earlier.

KLA is one of the largest providers in the world of wafer fabrication equipment for semiconductors, specializing in process control, where we expect its unmatched breadth and depth to defend and increase its market share. We believe trends toward higher complexity in chips will drive increasing demand and strong pricing for KLA’s equipment, including artificial intelligence and new technologies like high-bandwidth memory. We particularly like that KLA boasts the highest profit margins out of any WFE firm under our coverage.

KLA's investor day on March 12 focused on strong wafer fabrication equipment, or WFE, growth through 2030 and the firm's dominance of the process control market. KLA provided a 2030 target model calling for 15% annualized growth and 46% non-GAAP operating margin, at the midpoints.

KLA is one of the largest providers in the world of wafer fabrication equipment for semiconductors, specializing in process control, where we expect its unmatched breadth and depth to defend and increase its market share. We believe trends toward higher complexity in chips will drive increasing demand and strong pricing for KLA’s equipment, including artificial intelligence and new technologies like high-bandwidth memory. We particularly like that KLA boasts the highest profit margins out of any WFE firm under our coverage.

KLA reported good December-quarter results and guided to strong, double-digit growth in calendar 2026. Shares sold off 8% after hours due to KLA's 2026 guidance missing the more than 20% growth that peer Lam Research guided to Jan. 28.

KLA's September-quarter results were above the midpoints of guidance, with sales rising 13% year over year to $3.21 billion. Non-GAAP operating margin rose 170 basis points year over year to 43.2%. December-quarter guidance implies roughly flat revenue and margin sequentially.

KLA is one of the largest providers in the world of wafer fabrication equipment for semiconductors, specializing in process control, where we expect its unmatched breadth and depth to defend and increase its market share. We believe trends toward higher complexity in chips will drive increasing demand and strong pricing for KLA’s equipment, including artificial intelligence and new technologies like high-bandwidth memory. We particularly like that KLA boasts the highest profit margins out of any WFE firm under our coverage.

We have updated our medium-term growth assumptions for the wafer fabrication equipment market and for Applied Materials, KLA, and Lam Research specifically. Our growth forecasts for these companies also include advanced packaging investments for semiconductors.

KLA is one of the largest providers in the world of wafer fabrication equipment for semiconductors, specializing in process control, where we expect its unmatched breadth and depth to defend and increase its market share. We believe trends toward higher complexity in chips will drive increasing demand and strong pricing for KLA’s equipment, including artificial intelligence and new technologies like high-bandwidth memory. We particularly like that KLA boasts the highest profit margins out of any WFE firm under our coverage.

KLA is one of the largest providers in the world of wafer fabrication equipment for semiconductors, specializing in process control, where we expect its unmatched breadth and depth to defend and increase its market share. We believe trends toward higher complexity in chips will drive increasing demand and strong pricing for KLA’s equipment, including artificial intelligence and new technologies like high-bandwidth memory. We particularly like that KLA boasts the highest profit margins out of any WFE firm under our coverage.

KLA's June-quarter results came in at the high end of management guidance. Revenue rose 24% year over year and 4% sequentially to $3.17 billion. Guidance for the September quarter implies a similar revenue level, which management also expects in the December quarter.

KLA's March-quarter revenue rose 30% year over year to $3.06 billion, which was flat sequentially. March-quarter non-GAAP operating margin rose 740 basis points year over year to 44.2%. June-quarter guidance implies roughly flat revenue growth.

KLA's December-quarter revenue rose 24% year over year and 8% sequentially to $3.08 billion. Management guided to a midpoint of $3 billion in sales for the March quarter and gave expectations for KLA to outperform mid-single-digit chip equipment market growth in calendar 2025.

Many technology hardware stocks under our coverage plunged in Monday trading after reports of DeepSeek's R1 generative artificial intelligence model out of China offering performance parity to top US models at a much lower training cost. The iShares Semiconductor ETF was down 8% in midday trading.

We maintain our $670 fair value estimate for shares of wide-moat KLA as we maintain our strong medium-term growth thesis for the firm. KLA posted great September-quarter results and provided strong guidance for the December quarter. We see the firm benefiting from tremendous cutting-edge chip demand that drives higher demand for KLA’s process control systems. We believe the pace of innovation at the cutting edge—for both logic and memory chips—is accelerating, leading to rapid growth for KLA’s revenue. We expect strong growth to continue through calendar 2025. We see shares as fairly valued for this high-quality chip equipment titan.

We raise our fair value estimate for wide-moat KLA to $670 per share from $530, after raising our long-term growth assumptions. We expect a chip market upcycle to drive strong short-term growth, with some additional upside from artificial intelligence chip development. We now expect double-digit growth for KLA in both fiscal 2025 and fiscal 2026, with growth tapering to a midcycle level of around 7% thereafter. Longer-term, we continue to expect cyclicality in KLA’s results in the semiconductor market. In our view, shares have traded predominantly on rosy short-term expectations and have ignored longer-term cyclicality. We continue to see KLA as a high-quality dominant force in process control chip equipment, but see its valuation as challenging even after raising our assumptions.