Download PDF

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.

Show Full description

1.b. Last Insights on KLAC

Breaking News: KLA Corporation reported strong Q2 results, exceeding EPS expectations with revenue rising year over year, driven by semiconductor process control strength. The company achieved record revenue of $12.745 billion in 2025, up 17% year over year, and EPS growth of 29% year over year. Despite upbeat guidance, the stock dropped sharply. Analysts note KLA's rich valuation offsets its strong market position. KLA's gross margin was 62.8% in 2025. A analyst recommend a hold.

1.c. Company Highlights

2. KLA Corporation's Strong 2025 Performance and Promising 2026 Outlook

KLA Corporation reported a robust financial performance for 2025, with revenue reaching a record $12.745 billion, representing a 17% growth, and earnings per share (EPS) increasing by 29% year over year. For the December quarter, the company achieved revenue of $3.3 billion, with non-GAAP diluted EPS of $8.85 and GAAP diluted EPS of $8.68, beating analyst estimates of $8.79. The company returned $797 million in capital to shareholders through share repurchases and dividends. KLA's strong performance was driven by its core process control systems business, which outpaced the wafer front-end equipment (WFE) market by growing 20% versus a 10-12% growth in WFE.

Publication Date: Feb -02

📋 Highlights
  • 2025 Revenue Growth:: $12.745 billion, up 17% YoY, with EPS rising 29% to $8.85 (non-GAAP).
  • Capital Returns:: $797 million returned to shareholders in December quarter via $548 million share buybacks and $250 million dividends.
  • 2026 Revenue Guidance:: Mid-single-digit growth to $3.35 billion (±$150M) in March quarter, with non-GAAP EPS of $9.80 (±$0.78).
  • Segment Performance:: Inspection up 25%, patterning up 12%, and process control systems outperforming WFE growth at 20% YoY.
  • Gross Margin Trends:: Expected to rise to 63%+ long-term, with March quarter guidance at 61.75% (±1.00%).

Guidance and Outlook for 2026

The company expects the industry to grow in the high single to low double digits in 2026, reaching approximately $120 billion. KLA is poised for mid-single digit revenue growth in 2026, with an accelerating growth rate in the second half of the year. For the March quarter, the company guided revenue of $3.35 billion, plus or minus $150 million, with a gross margin of 61.75%, plus or minus one percentage point. Non-GAAP diluted EPS is expected to be $9.8, plus or minus $0.78. The company's business model is designed to deliver 40% to 50% incremental operating margin leverage on revenue growth over the long run.

Valuation and Growth Prospects

With a P/E Ratio of 41.2 and an EV/EBITDA of 32.33, the market has priced in significant growth expectations for KLA. The company's ROE of 95.22% and ROIC of 36.95% indicate strong profitability. Analysts estimate next year's revenue growth at 18.8%, suggesting that the current valuation may be justified if the company can meet these expectations. KLA's growth prospects are driven by increasing process control intensity, particularly in advanced logic and DRAM, as well as opportunities in its service businesses.

Drivers of Growth

The growth in inspection and patterning is driven by the increasing complexity of advanced technologies, such as High-Bandwidth Memory (HBM) and Artificial Intelligence (AI). The company sees opportunities in its service businesses as customers look to maximize uptime and performance. DRAM process control intensity is increasing with EUV and HBM, and the company expects foundry logic to see a broadening of customers, materializing in growth. KLA expects to gain share in the market, particularly in leading-edge foundry logic and advanced packaging.

Challenges and Opportunities

The company faces supply constraints, particularly in the first half of 2026, due to long lead times for optical components and facility readiness dynamics. However, KLA expects growth to accelerate in the second half, with a growth rate of high single digits to low double digits. The company is confident about its 12% to 14% normalized service growth target and sees opportunities in China, with revenue potentially recovering after being impacted by affiliate rules.

3. NewsRoom

Card image cap

Retirees Should Know One Third of FlexShares Dividend Fund Is Actually Technology Stocks

Feb -02

Source: 247wallst.com

Card image cap

KLA Q2 Earnings Call Highlights

Jan -31

Source: defenseworld.net

Card image cap

KLA Q2 Earnings Surpass Estimates, Revenues Increase Y/Y, Shares Fall

Jan -30

Source: zacks.com

Card image cap

KLA's Rich Valuation Offsets Its Strong Market Position: Analyst

Jan -30

Source: benzinga.com

Card image cap

KLA Corporation Faces Mixed Market Reaction Despite Strong Q2 Results

Jan -30

Source: gurufocus.com

Card image cap

Dow Jones Today: Stock Indexes Drop But Are Poised for Monthly Gains; Trump Taps Warsh for Next Fed Chair; Gold, Silver Futures Sink

Jan -30

Source: investopedia.com

Card image cap

Why KLA's Stock Crashed Today

Jan -30

Source: fool.com

Card image cap

KLA Stock Dives After Earnings Beat. What's Hitting the Chip-Gear Favorite.

Jan -30

Source: barrons.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
KLA

A-Score: 5.6/10

Value: 0.8

Growth: 8.3

Quality: 7.9

Yield: 2.0

Momentum: 9.5

Volatility: 5.0

1-Year Total Return ->

View Full Report
Stock-Card
Broadcom

A-Score: 5.5/10

Value: 0.0

Growth: 8.3

Quality: 8.2

Yield: 3.0

Momentum: 10.0

Volatility: 3.7

1-Year Total Return ->

View Full Report
Stock-Card
Lam Research

A-Score: 5.5/10

Value: 0.8

Growth: 8.1

Quality: 8.3

Yield: 2.0

Momentum: 9.5

Volatility: 4.3

1-Year Total Return ->

View Full Report
Stock-Card
Applied Materials

A-Score: 5.3/10

Value: 1.6

Growth: 7.9

Quality: 8.1

Yield: 1.0

Momentum: 8.5

Volatility: 5.0

1-Year Total Return ->

View Full Report
Stock-Card
Texas Instruments

A-Score: 4.5/10

Value: 1.0

Growth: 3.6

Quality: 7.1

Yield: 6.0

Momentum: 3.0

Volatility: 6.3

1-Year Total Return ->

View Full Report
Stock-Card
Microchip Technology

A-Score: 3.3/10

Value: 2.7

Growth: 1.9

Quality: 3.7

Yield: 5.0

Momentum: 2.5

Volatility: 4.0

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

1410.45$

Current Price

1410.45$

Potential

-0.00%

Expected Cash-Flows