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KLAC heads into fiscal Q4 earnings with AI-driven demand and advanced packaging growth, while higher DRAM costs pressure margins.

Wall Street analysts expect KLA (KLAC - Free Report) to post quarterly earnings of $1.00 per share in its upcoming report, which indicates a year-over-year increase of 6.4%. Revenues are expected to be $3.61 billion, up 13.7% from the year-ago quarter.

Over the last 30 days, there has been an upward revision of 1.3% in the consensus EPS estimate for the quarter, leading to its current level. This signifies the covering analysts' collective reconsideration of their initial forecasts over the course of this timeframe.

Before a company reveals its earnings, it is vital to take into account any changes in earnings projections. These revisions play a pivotal role in predicting the possible reactions of investors toward the stock. Multiple empirical studies have consistently shown a strong association between trends in earnings estimates and the short-term price movements of a stock.

While investors typically use consensus earnings and revenue estimates as indicators of quarterly business performance, exploring analysts' projections for specific key metrics can offer valuable insights.

Bearing this in mind, let's now explore the average estimates of specific KLA metrics that are commonly monitored and projected by Wall Street analysts.

Analysts' assessment points toward 'Revenues- Specialty Semiconductor Process' reaching $159.85 million. The estimate indicates a change of +12.7% from the prior-year quarter.

Analysts forecast 'Revenues- Service' to reach $806.64 million. The estimate indicates a change of +14.8% from the prior-year quarter.

The consensus among analysts is that 'Revenues- Product' will reach $2.69 billion. The estimate points to a change of +8.9% from the year-ago quarter.

Analysts predict that the 'Revenues- Semiconductor Process Control' will reach $3.27 billion. The estimate suggests a change of +13.5% year over year.

Based on the collective assessment of analysts, 'Revenues- PCB and Component Inspection' should arrive at $175.04 million. The estimate points to a change of +13.6% from the year-ago quarter.

The average prediction of analysts places 'Geographic Revenues- China' at $1.05 billion. The estimate points to a change of +9.6% from the year-ago quarter.

It is projected by analysts that the 'Geographic Revenues- Rest of Asia' will reach $143.66 million. The estimate indicates a year-over-year change of +78.3%.

Analysts expect 'Geographic Revenues- North America' to come in at $377.17 million. The estimate indicates a change of +34.1% from the prior-year quarter.

The consensus estimate for 'Geographic Revenues- Europe & Israel' stands at $197.33 million. The estimate indicates a change of +57.8% from the prior-year quarter.

According to the collective judgment of analysts, 'Geographic Revenues- Taiwan' should come in at $1.32 billion. The estimate indicates a change of +51.1% from the prior-year quarter.

The combined assessment of analysts suggests that 'Geographic Revenues- Korea' will likely reach $678.09 million. The estimate points to a change of +41.8% from the year-ago quarter.

The collective assessment of analysts points to an estimated 'Geographic Revenues- Japan' of $380.19 million. The estimate suggests a change of +0.8% year over year.

View all Key Company Metrics for KLA here>>>

KLA shares have witnessed a change of -10.7% in the past month, in contrast to the Zacks S&P 500 composite's +0.4% move. With a Zacks Rank #3 (Hold), KLAC is expected closely follow the overall market performance in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>> .

The market expects KLA (KLAC - Free Report) to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended June 2026. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates.

The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on July 28. On the other hand, if they miss, the stock may move lower.

While the sustainability of the immediate price change and future earnings expectations will mostly depend on management's discussion of business conditions on the earnings call, it's worth handicapping the probability of a positive EPS surprise.

Zacks Consensus EstimateThis maker of equipment for manufacturing semiconductors is expected to post quarterly earnings of $1.00 per share in its upcoming report, which represents a year-over-year change of +6.4%.

Revenues are expected to be $3.61 billion, up 13.7% from the year-ago quarter.

Estimate Revisions TrendThe consensus EPS estimate for the quarter has been revised 1.28% higher over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period.

Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts.

Price, Consensus and EPS Surprise

Earnings WhisperEstimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. This insight is at the core of our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction).

The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier.

Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only.

A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP.

Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell).

How Have the Numbers Shaped Up for KLA?For KLA, the Most Accurate Estimate is lower than the Zacks Consensus Estimate, suggesting that analysts have recently become bearish on the company's earnings prospects. This has resulted in an Earnings ESP of -0.59%.

On the other hand, the stock currently carries a Zacks Rank of #3.

So, this combination makes it difficult to conclusively predict that KLA will beat the consensus EPS estimate.

Does Earnings Surprise History Hold Any Clue?While calculating estimates for a company's future earnings, analysts often consider to what extent it has been able to match past consensus estimates. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number.

For the last reported quarter, it was expected that KLA would post earnings of $0.92 per share when it actually produced earnings of $0.94, delivering a surprise of +2.17%.

Over the last four quarters, the company has beaten consensus EPS estimates four times.

Bottom LineAn earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss.

That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.

KLA doesn't appear a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

KLAC weekly chart shows decline into rising channel formation following peak. Source: TradingView Given the decisive bearish response that followed the peak, it appears a key resistance level was reached. The high coincided with a 150% extension of a rising trend channel. Shortly after reaching that high, KLAC fell back into the channel formation and found support near the channel’s midline. This is the second time in recent weeks that buyers and sellers have recognized the channel’s structure, reinforcing its technical significance. This week, however, last week’s low of $210.86 was broken, confirming a decline below the channel midline.

Weekly Chart Points to Lower Support Moreover, this week ended at $212.17, below the midline, further confirming downward pressure. Once the midline fails as support, the lower channel boundary becomes a potential target. At a minimum, this suggests further downside is likely during the current correction. Based on the weekly chart, the next lower target zone is near the prior trend high of $193.94 and the rising 20-week moving average, currently at $191.23.

I rate KLA Corporation a Strong Buy with a $313 price target, implying 40% upside from $222. KLAC's 58% share in semiconductor process control gives it a dominant position in a part of semiconductor manufacturing that becomes more valuable as chips become harder to produce. My model estimates these drivers can increase revenue from about $14 billion in 2026 to roughly $18.3 billion by 2028 and lift split-adjusted EPS to about $5.3.

KLA's AI-driven growth and advanced packaging gains support its outlook, but rich valuation, margin pressure and trade risks temper near-term upside.

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The world’s richest investor is making an unprecedented all-in bet on artificial intelligence. In June alone, Bezos Expeditions, Jeff Bezos’ 21-year-old family office, made five direct investments in AI startups, accounting for 10% of all family office dealmaking that month, per Fintrx. Bezos Expeditions is now the most active family office investor of 2026 with eight direct investments in private companies year to date. The bulk of that capital went to one startup: Project Prometheus.

The Civilizational Wealth Thesis Bezos framed his ambition in unusually grand terms during a June 11, 2026 CNBC interview with David Faber: “What drives the wealth of nations? What drives civilizational wealth? The answer is invention. Six thousand years ago somebody invented the plow and we all got wealthier. Much later somebody invented the steam engine and we all got wealthier. Our goal at Prometheus is building a set of tools that accelerate that invention loop.”

Prometheus is a physical AI startup co-founded and co-CEO’d by Bezos alongside Vik Bajaj, a Stanford professor and former co-founder of Alphabet’s Verily. It launched in November 2025 with $6.2 billion, raised a $12 billion Series B on June 11, 2026, and is now valued at approximately $41 billion with more than $18 billion in total funding. The company is building an “artificial general engineer”: AI tools that compress the timeline from invention to manufactured physical product across chips, jet engines, batteries, solar panels, and pharmaceuticals. Bezos describes the addressable market as the physical economy, roughly 60% of world GDP or approximately $70 trillion. It is his first CEO role outside of Amazon since stepping down in 2021.

A Full-Stack Bet Across the AI Frontier Four other June investments show the breadth of the wager. Bezos Expeditions co-led rounds in CuspAI (AI models for chemistry) and Flourish (brain-inspired AI models), and participated in Generalist (robotics) and General Intuition, which raised a $320 million Series A backed alongside Hillspire, the family office of ex-Google CEO Eric Schmidt, to train spatial AI models on millions of hours of gameplay video. All four raised nine-figure rounds.

On the AI bubble question, Bezos told Andrew Ross Sorkin on Squawk Box in May 2026: “Even if it does turn out to be a bubble, you shouldn’t worry about it because the bubble is driving investment and a lot of the investment is going to turn out to be very healthy. Investors at this moment haven’t learned yet how to discriminate between good ideas and bad ideas, and that’s OK, because the good ideas will pay for all of the losers.” On employment: “I think what’s actually going to happen is we’re going to have labor scarcity as a result. When you have significant productivity in the economy, the standard of living goes up.”

Where Public-Market Investors Can Get Adjacent Exposure Prometheus, CuspAI, Flourish, Generalist, and General Intuition are all private. Retail investors cannot buy in directly. The closest public access sits at the semiconductor equipment layer, where Morgan Stanley projects global AI capex will surpass $1 trillion in 2027.

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Lam Research (NASDAQ:LRCX | LRCX Price Prediction) gauges that spending. CEO Tim Archer said Lam “delivered record revenue and EPS in the March quarter as AI-driven demand reshapes the semiconductor industry,” with Q3 FY2026 revenue of $5.84 billion, up 23.8% year over year, and Q4 guidance of $6.60 billion. Lam recently hit an all-time high of $349.21.

KLA Corporation (NASDAQ:KLAC) dominates process control, the inspection layer required to manufacture advanced-node chips. J.P. Morgan projects KLA could more than triple earnings by 2030 driven by process control tools for advanced chips. CEO Rick Wallace has described KLA as “a key enabler of the AI ecosystem” benefiting “from the global AI infrastructure buildout across all major growth vectors, including foundry/logic, memory, advanced packaging, and services.” The board recently authorized an additional $7 billion in buybacks and a 17th consecutive annual dividend increase, to $2.30 per share.

Amazon (NASDAQ:AMZN) benefits through AWS and its Trainium chip franchise. AWS revenue hit $37.59 billion in Q1 2026, up 28% year over year, the fastest growth in 15 quarters, per the company’s Q1 2026 SEC filing. Bezos remains the largest individual shareholder.

The scale of the commitment (more than $18 billion raised for Prometheus, eight direct 2026 investments, 10% of family office dealmaking in a single month) frames the stakes. The person who built Amazon is treating this as the most important bet of his life, and he has named the prize: civilizational wealth.

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KLA Corporation (KLAC) earns a Buy rating for its superior Quality Growth profile, defensive revenue base, and diversified customer exposure versus ASML. KLAC consistently beats guidance, with Q3 FY2026 revenue up 11% YoY and management raising full-year growth expectations to the high teens. The process control intensity model enables KLAC to compound earnings through node transitions, benefiting from secular trends in chip complexity and advanced packaging.

On July 02, 2026, KLA Corp (KLAC) shares fell 11.5% to a current price of $235.55. This decline comes amid a 52-week range of $83.22 to $307.37, reflecting sign

In the latest close session, KLA (KLAC - Free Report) was down 3.93% at $248.64. The stock's change was less than the S&P 500's daily loss of 0.05%. Meanwhile, the Dow experienced a drop of 0.09%, and the technology-dominated Nasdaq saw a decrease of 0.24%.

The maker of equipment for manufacturing semiconductors's stock has climbed by 34.26% in the past month, exceeding the Computer and Technology sector's loss of 2.81% and the S&P 500's loss of 1.42%.

The investment community will be closely monitoring the performance of KLA in its forthcoming earnings report. The company's upcoming EPS is projected at $1, signifying a 6.38% increase compared to the same quarter of the previous year. Meanwhile, our latest consensus estimate is calling for revenue of $3.59 billion, up 13.14% from the prior-year quarter.

Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $3.71 per share and revenue of $13.52 billion, indicating changes of +11.41% and +11.19%, respectively, compared to the previous year.

Investors should also take note of any recent adjustments to analyst estimates for KLA. Such recent modifications usually signify the changing landscape of near-term business trends. Therefore, positive revisions in estimates convey analysts' confidence in the business performance and profit potential.

Our research reveals that these estimate alterations are directly linked with the stock price performance in the near future. To take advantage of this, we've established the Zacks Rank, an exclusive model that considers these estimated changes and delivers an operational rating system.

The Zacks Rank system, spanning from #1 (Strong Buy) to #5 (Strong Sell), boasts an impressive track record of outperformance, audited externally, with #1 ranked stocks yielding an average annual return of +25% since 1988. Over the past month, there's been a 0.01% rise in the Zacks Consensus EPS estimate. Currently, KLA is carrying a Zacks Rank of #3 (Hold).

Looking at its valuation, KLA is holding a Forward P/E ratio of 69.82. This represents a premium compared to its industry average Forward P/E of 29.47.

One should further note that KLAC currently holds a PEG ratio of 3.83. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company's anticipated earnings growth rate. As of the close of trade yesterday, the Electronics - Miscellaneous Products industry held an average PEG ratio of 1.71.

The Electronics - Miscellaneous Products industry is part of the Computer and Technology sector. At present, this industry carries a Zacks Industry Rank of 54, placing it within the top 23% of over 250 industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Remember to apply Zacks.com to follow these and more stock-moving metrics during the upcoming trading sessions.

On June 22, 2026, KLA Corp KLAC shares rose 3.7% to a current price of $269.16. The stock has experienced significant price fluctuations over the past year, reaching a 52-week high of $269.90 and a low of $83.22. This strong price movement reflects a year-to-date increase of 122.1% and an impressive 218.7% rise over the past year.

GF Value™ verdict: Current price of $269.16 is 169.7% overvalued compared to the GF Value™ of $99.79.GF Score™: 86/100 (Strong), indicating a robust overall performance across key metrics.Most notable signal: Insiders have sold $19.7M worth of stock in the past 3 months, with no buying activity. Is KLAC Overvalued or Undervalued? KLA Corp's current share price of $269.16 is significantly above its estimated fair value of $99.79, as indicated by a GF Value™ assessment that labels the stock as 169.7% overvalued. This discrepancy suggests that the market price may not accurately reflect the company's intrinsic value, presenting a potential risk for current and prospective shareholders. The GF Valuation label of "Significantly Overvalued" reinforces this assessment, indicating a lack of margin of safety for investors considering an entry point.

GF Value™ is GuruFocus' proprietary measure of intrinsic value, calculated from historical trading multiples, past business growth, and future performance estimates. Given the substantial difference between the market price and GF Value™, investors may want to approach KLA Corp with caution, as the high valuation could indicate an overestimation of future growth or profitability potential.

How Does KLAC's Valuation Compare to Its History? Metric Current Historical P/E (TTM) 76.2x 26.1x Forward P/E 52.5x N/A The current P/E ratio of 76.2x is significantly higher than the 5-year median P/E of 26.1x, marking an increase of 192%. This analysis aligns with the GF Value™ verdict, which indicates that KLA Corp is trading at an inflated valuation compared to its historical performance. As such, this P/E analysis further corroborates concerns about overvaluation in the current market environment.

What Does KLAC's GF Score™ Tell Us? Metric Rating GF Score™ 86 Financial Strength 7/10 Profitability 10/10 Growth 10/10 Valuation 1/10 Momentum 9/10 KLA Corp's GF Score™ of 86/100 reflects strong performance across several key metrics, particularly in profitability and growth, where it achieved perfect scores of 10/10. However, the valuation rank of 1/10 signals significant concerns regarding the stock's current price relative to its intrinsic value. The financial strength rating of 7/10 suggests reasonable stability, while a momentum rank of 9/10 indicates positive recent performance. Overall, while the company exhibits strengths in growth and profitability, the valuation aspect raises red flags for potential investors.

What Are Insiders Doing with KLAC Stock? Recent insider activity for KLA Corp reveals that insiders have sold $19.7 million worth of shares over the past three months without any buying activity. This selling trend could suggest that those with intimate knowledge of the company's operations and future prospects may have concerns about the current stock price. While insider selling does not always predict future performance, it often raises questions about the company's valuation and potential future challenges.

What This Means for Investors Based on the current GF Value™ assessment, KLA Corp appears to be significantly overvalued at a price of $269.16 compared to a GF Value™ of $99.79. The substantial gap indicates that the stock may not provide a favorable risk/reward profile for investors at this time.

For the complete analysis, visit the KLA Corp KLAC stock page. You can also explore the GF Value™ page for detailed valuation methodology, or use the GuruFocus Stock Screener to find similar opportunities.

Frequently Asked Questions What is KLAC's GF Score™?

KLA Corp has a GF Score™ of 86/100, indicating strong overall performance across key metrics and a potential for higher long-term returns.

Is KLAC overvalued or undervalued?

KLA Corp is currently overvalued, with a GF Value™ of $99.79, suggesting that the market price is significantly higher than the intrinsic value.

What is KLAC's P/E ratio?

KLA Corp's P/E (TTM) ratio is 76.2x, which is substantially above its 5-year median P/E of 26.1x, indicating a significant increase in valuation compared to its historical levels.

This stock alert was generated using automated technology and GuruFocus financial data to provide readers with timely and accurate market reporting. This content was reviewed by GuruFocus editorial team prior to publication. Please send any questions or comments about this story to [email protected].

Key Takeaways AMAT benefits from AI-driven spending across foundry/logic, DRAM and advanced packaging.KLAC's process-control strength supports yield gains, advanced packaging and long-term growth.AMAT offers faster 2026 sales and EPS growth, stronger estimate revisions and a lower forward P/E. Semiconductor equipment companies are riding a powerful wave of AI-driven demand as chipmakers invest aggressively in leading-edge logic, DRAM, high-bandwidth memory and advanced packaging. In this environment, KLA Corporation (KLAC - Free Report) and Applied Materials, Inc. (AMAT - Free Report) are leveraging sharply different strengths to capture the next phase of wafer fab equipment growth. While both are benefiting from rising chip complexity and expanding customer visibility, differences in market exposure, growth breadth and near-term execution dynamics are beginning to set them apart.

KLA is anchored in process control, inspection, metrology and yield optimization — areas that become more critical as AI chips become larger, more complex and more expensive to manufacture. Applied Materials, meanwhile, has a broader equipment footprint across materials engineering, deposition, etch, leading-edge foundry/logic, DRAM and advanced packaging. This gives AMAT multiple paths to benefit as AI reshapes semiconductor manufacturing priorities.

For investors seeking exposure to the semiconductor equipment cycle’s AI-led upside, the key question is: Which of these equipment stocks offers the more compelling setup right now? Let’s break down the fundamentals, growth outlook and valuation to determine the better buy.

The Case for KLACKLA’s strength in process control remains central to its investment case. As chip architectures become more complex and AI chips require higher performance, tighter inspection, metrology and yield-management solutions are becoming increasingly critical. KLA’s tools help customers shorten learning cycles, improve production efficiency and manage yield in high-volume manufacturing environments. This positions the company well as a leading-edge foundry/logic provider, while demand for high-bandwidth memory and advanced packaging continues to grow.

KLA is also benefiting from rising process-control intensity across multiple phases of semiconductor manufacturing. Management noted that faster product cycles, higher-value wafers and masks, rising design complexity, greater variability and growing advanced-packaging requirements are increasing the need for process-control solutions. These tools help customers address process-integration challenges in R&D and early fab ramps while supporting yield management in high-volume production.

Advanced packaging is becoming a major growth driver for KLA. The company expects semiconductor process-control product revenue tied to advanced packaging to rise to roughly $1 billion in 2026 from about $635 million in 2025. Management also highlighted market-share gains in advanced wafer-level packaging, driven by continued customer adoption of its packaging portfolio. This is important because advanced packaging is increasingly critical for AI accelerators and high-bandwidth memory.

KLA’s services business also strengthens its investment case. The business benefits from a growing installed base, longer tool lifetimes and rising customer expectations for tool performance and availability. This provides KLA with a recurring revenue stream and supports strong free cash flow generation. The company emphasized that services remain an important part of the company’s long-term growth model and capital-return strategy.

Financially, KLA remains one of the strongest operators in the semiconductor equipment space, supported by strong margins, consistent free cash flow and shareholder-friendly capital returns. The company has also increased its long-term revenue growth targets and capital-allocation framework, reflecting confidence in sustained demand for process-control technologies. However, elevated DRAM chip costs, tariff-related pressure and product mix are expected to weigh on gross margin, with management pointing to a roughly 100-basis-point headwind over the next several quarters.

The Case for AMATApplied Materials is building strong structural momentum through its broad exposure to the most critical areas of AI-driven semiconductor spending. The company is benefiting from rising investments in leading-edge foundry/logic, DRAM and advanced packaging, which are becoming central to improving AI chip performance, power efficiency and cost. Management expects these three areas to account for more than 80% of the year-over-year growth in wafer fab equipment spending in 2026, with a similar demand profile likely in 2027.

At the technology level, Applied Materials is leveraging materials engineering to capture opportunities tied to major device architecture transitions. The shift to gate-all-around nodes is expanding the company’s addressable market and creating room for share gains. New products such as Trillium ALD and Precision PECVD are designed to support advanced transistor structures, helping chipmakers improve device performance and reduce leakage.

The company is also strengthening its position in DRAM and advanced packaging — two areas increasingly tied to AI infrastructure demand. AI computing is driving aggressive DRAM capacity additions, while high-bandwidth memory and chiplet-based architectures are increasing the need for more advanced packaging solutions. Applied Materials expects packaging revenues to grow more than 50% in calendar 2026, and its planned NEXX acquisition is aimed at expanding its panel-level packaging capabilities for larger AI accelerator packages.

Operationally, Applied Materials is benefiting from stronger customer visibility and better long-range planning. Customers are providing rolling eight-quarter forecasts, allowing the company to align manufacturing capacity, service resources and supplier readiness with future ramps. Applied Global Services adds another recurring growth driver, supported by higher fab utilization and more than 35,000 chambers connected to its AIx software capabilities. These efforts position AMAT to scale efficiently while supporting customers’ output, yield and cost-efficiency goals.

How Does the Zacks Consensus Estimate Compare for KLAC & AMAT?The Zacks Consensus Estimate for KLA’s 2026 sales and EPS suggests year-over-year increases of 11.2% and 11.4%, respectively. In the past 60 days, earnings estimates for 2026 have risen 1.4%.

KLAC Earnings Estimate Trend
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for Applied Materials’ 2026 sales and EPS suggests year-over-year increases of 17.3% and 28.5%, respectively. In the past 60 days, earnings estimates for 2026 have increased 9%.

AMAT Earnings Estimate Trend
Image Source: Zacks Investment Research

Price Performance & Valuation of KLAC & AMATKLAC stock has rallied 58.4% in the past three months, outpacing its industry and the S&P 500’s rise of 48.3% and 13.4%, respectively. Meanwhile, Applied Materials’ shares have climbed 58.6% in the same time.

KLAC & AMAT Stock Three-Month Price Performance
Image Source: Zacks Investment Research

KLAC is trading at a forward 12-month price-to-earnings (P/E) ratio of 49.58X, above the industry average of 39.57X over the last year. AMAT’s forward 12-month P/E multiple sits at 40.13X over the same time frame.

Image Source: Zacks Investment Research

End NotesApplied Materials stands out as the stronger investment candidate at this stage, supported by higher projected sales and EPS growth, stronger upward estimate revisions and a relatively more attractive valuation. Its exposure to leading-edge foundry/logic, DRAM and advanced packaging gives the company multiple avenues to benefit as AI-related manufacturing investments expand.

KLA remains a high-quality franchise, supported by process-control strength, strong margins, consistent free cash flow and growing advanced-packaging relevance. However, slower expected earnings growth, modest estimate revisions and a premium valuation suggest a less compelling entry point after the stock’s recent rally.

For investors seeking exposure to the semiconductor equipment cycle, AMAT offers a better risk-reward profile. Its stronger growth visibility, favorable estimate trend and Zacks Rank #2 (Buy) make it the more actionable choice over KLAC, which currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

KLA (KLAC) saw its shares surge in the last session with trading volume being higher than average. The latest trend in earnings estimate revisions could translate into further price increase in the near term.

KLA Corporation (NASDAQ:KLAC | KLAC Price Prediction) at $254.54 is a Hold. The semiconductor process control leader executed a 10-for-1 stock split into a vertical rally, and the post-split share price is running far ahead of Wall Street’s price targets.

KLA sells the inspection and metrology tools that catch defects on the most advanced wafers in the world. That makes it the picks-and-shovels play on every AI accelerator from TSMC, Samsung, and leading memory fabs. CEO Rick Wallace calls the company a “key enabler of the AI ecosystem”, and the market has agreed. Shares are up 77.21% over the past three months on a split-adjusted basis, with a 31.94% burst in the last week around the split and a 21% dividend hike.

Why The AI Picks-And-Shovels Trade Still Has Legs KLA has posted four straight earnings beats. Q3 FY2026 revenue reached $3.415 billion (+11.5% YoY) with non-GAAP EPS of $9.40 versus $9.1535 consensus. Operating margin sits at 41.2% and return on equity at 95%.

Management’s Q4 guide of $3.575 billion in revenue implies sequential growth. CFO Bren Higgins said advanced packaging process control revenue should hit $1 billion in 2026. J.P. Morgan models earnings reaching $95 per share by 2030 on a pre-split basis. Capital returns include a 17th consecutive annual dividend increase and an additional $7 billion stock repurchase authorization.

The Cash Flow Warning Operating cash flow in Q3 FY2026 fell 34.02% year over year and free cash flow dropped 36.97%, a sharp reversal from the prior quarter’s $1.262 billion in FCF. That working capital swing matters when valuation is stretched.

KLAC trades at a 72 trailing P/E, 57 times book, and 55 times EV/EBITDA. GuruFocus pegs fair value at roughly $997.04 pre-split versus the $2,213.37 CEO Rick Wallace sold at on June 11. Insiders have logged 19 sells and zero buys over the last year. China export controls and tariff escalation remain live risks per company filings.

Why Patience Beats Conviction Right Now Both sides are right. The AI capex cycle is real, KLA’s process control moat is real, and the buyback authorization is real. But so is a 71x earnings multiple in a cyclical equipment business and the cash flow deceleration. A retest of support near $180 would re-rate the risk/reward. A clean Q4 earnings report with FCF recovering to last year’s pace would settle the cyclicality debate.

Until one of those resolves, patience outranks action on either side. For existing holders, the next quarterly report is the key data point to watch.

What The Numbers Actually Say KLAC trades at $254.54 against a Wall Street consensus price target of $192.62, implying roughly 24.4% downside if analysts are right. Several shops have raised numbers post-split, with one tracking service citing a refreshed average of $263.74.

Among 30 analysts, the ratings split is:

Strong Buy: 5 Buy: 14 Hold: 10 Strong Sell: 1 KLAC is up 110.03% year to date and 192.78% over the trailing year, outpacing the S&P 500 by a wide margin year to date. Beta sits at 1.504.

The Verdict: Hold Through The Next Earnings Report At $254.54, KLA Corporation is a Hold.

An upgrade to Buy triggers on a pullback toward the $180.00 area, where the 50-day moving average of $186.44 converges with prior breakout support. That would put the forward multiple back in a defensible range. A downgrade to Sell triggers on a Q4 report confirming FCF deterioration is structural rather than working-capital noise, or a China export control escalation that bites the order book.

The cost of patience is missing further melt-up if AI capex keeps surprising. The cost of acting prematurely is paying 71 times earnings for a cyclical name as the CEO trims into strength. Watch the FCF line, the gross margin guide near 61.75%, and any change in China-related revenue disclosure.

KLA is a great business at an uncomfortable price, and that rewards waiting over reacting.

Key Takeaways KLA Q3 fiscal 2026 revenues rose 11% YoY as Semiconductor Process Control sales climbed 13%.KLAC expects wafer fabrication equipment spending to exceed $140 billion in fiscal 2026.KLA projects advanced packaging revenues to surpass $1 billion amid rising AI chip demand. KLA Corporation (KLAC - Free Report) appears well-positioned to capitalize on the semiconductor industry’s next wave of greenfield fab investments, driven largely by booming AI infrastructure demand and expanding memory capacity requirements. Its strong exposure to process control intensity at advanced nodes could become a major catalyst for multi-year revenue growth.

In the fiscal third quarter of 2026, KLA reported revenues of $3.42 billion, up 11% year over year, while adjusted earnings rose to $9.40 per share from $8.41 a year ago. Semiconductor Process Control revenues climbed 13% year over year to $3.08 billion, accounting for roughly 90% of total sales.

Management highlighted that greenfield opportunities across DRAM and NAND are expected to increase into 2027, supported by persistent AI-driven demand for high-bandwidth memory and advanced logic chips. KLA also noted that process control intensity is rising as chipmakers adopt increasingly complex architectures, larger die sizes and advanced packaging technologies. Importantly, KLAC expects the wafer fabrication equipment market to exceed $140 billion in 2026, continuing to outgrow the broader market through share gains and higher adoption of process control. Its advanced packaging business is also seeing rapid traction, with management expecting revenues from the segment to surpass $1 billion this year.

Beyond growth, KLA continues to generate robust free cash flow, enabling aggressive shareholder returns. The company recently announced a 21% dividend hike alongside an additional $7 billion share repurchase authorization, signaling confidence in its long-term growth trajectory.

KLA, Onto Innovation & Applied Materials Battle for Chip Tool SupremacyKLA continues to strengthen its leadership in the semiconductor equipment market, particularly in wafer inspection, metrology and advanced packaging process control systems. Amid such an environment, it faces substantial competition from key market players, including Onto Innovation Inc. (ONTO - Free Report) and Applied Materials, Inc. (AMAT - Free Report) .

Onto Innovation remains a key player in specialty metrology and advanced packaging inspection solutions, especially in heterogeneous integration and panel-level packaging applications. Meanwhile, Applied Materials leverages its broad semiconductor equipment portfolio, spanning deposition, etch and packaging technologies to capitalize on rising fab investments globally.

As semiconductor manufacturers ramp greenfield fabs and adopt advanced architectures, competition across inspection, yield management and packaging technologies is intensifying, creating long-term growth opportunities for KLA, Onto Innovation and Applied Materials.

KLAC Stock’s Price Performance & Valuation TrendShares of this California-based equipment manufacturer have appreciated 58.7% year to date, outperforming the Zacks Electronics - Miscellaneous Products industry, the Zacks Computer & Technology sector and the S&P 500 Index.

Image Source: Zacks Investment Research

KLAC stock is currently trading at a premium compared with its industry peers, with a forward 12-month price-to-earnings (P/E) ratio of 39.62, as shown in the chart below.

Image Source: Zacks Investment Research

Earnings Estimate Trend of KLACFor fiscal 2026 and fiscal 2027, the Zacks Consensus Estimate for KLAC’s earnings has moved up over the past 30 days by 1.1% and 4.9%, respectively. The estimated figures for fiscal 2026 and fiscal 2027 reflect year-over-year increases of 11.4% and 34.3%, respectively.

Image Source: Zacks Investment Research

KLA currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The information in this video is critical in making a decision regarding KLA Corporation (KLAC +4.19%).

*Stock prices used were the afternoon prices of May 23, 2026. The video was published on May 25, 2026.

Parkev Tatevosian, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Parkev Tatevosian is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

The video will answer whether I think the stock is an undervalued buying opportunity.

*Stock prices used were the afternoon prices of May 24, 2026. The video was published on May 26, 2026.

Parkev Tatevosian, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Parkev Tatevosian is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

KLA Corporation (KLAC) Presents at Bank of America 2026 Global Technology Conference Transcript

Key Takeaways KLA raised its 2030 revenue CAGR target to 13-17%, aiming to outgrow the broader wafer equipment market.KLAC sees AI-driven chip complexity boosting demand for inspection, metrology and yield tools.Advanced packaging process-control revenues are projected to rise from about $635M in 2025 to $1B in 2026. KLA Corporation (KLAC - Free Report) is strengthening its position in the chip equipment market as AI-driven semiconductor complexity makes process control increasingly critical to advanced manufacturing. The company’s long-term growth case is tied less to broad capacity additions alone and more to the rising need for inspection, metrology and yield-optimization tools as chips become more complex, valuable and difficult to manufacture.

KLA’s updated long-term framework supports this outgrowth narrative. The company raised its revenue CAGR target to 13-17% through 2030, assuming the wafer equipment market reaches approximately $215 billion, plus or minus $20 billion, by 2030. KLA expects to grow faster than the broader market, supported by continued share gains, rising process-control intensity, advanced packaging growth and long-term expansion in services.

Artificial intelligence is accelerating a broader increase in process-control intensity. Demand for high-performance computing, high-bandwidth memory and custom silicon is increasing the pressure on chipmakers to improve yields, shorten learning cycles and accelerate production. KLA noted that faster product cycles, higher-value wafers and masks, rising design complexity and greater variability are expanding demand for its solutions across R&D, fab ramps and high-volume manufacturing.

Advanced packaging is becoming another important growth lever. Management expects semiconductor process-control revenues tied to advanced packaging to rise from approximately $635 million in 2025 to about $1 billion in 2026, supported by stronger demand for wafer-level packaging and higher-precision inspection requirements. This opportunity complements the company’s broader market-share gains across process control, including mask inspection, optical pattern wafer inspection and electron beam inspection.

KLA expects the wafer equipment market, including advanced packaging, to exceed $140 billion in 2026, with 2027 growth expected to be stronger than 2026. The outlook is supported by strong customer engagement, a growing systems backlog and multiple new fab projects. Given its process-control focus, growing advanced-packaging exposure, expanding services base and improving share position, KLA has a credible path to outgrowing the broader semiconductor equipment market through 2030, provided industry spending remains favorable.

How KLA Stacks Up to CompetitorsKLA operates in a competitive chip equipment market where MKS Inc. (MKSI - Free Report) and Advanced Energy Industries, Inc. (AEIS - Free Report) are also benefiting from AI-driven semiconductor investment. MKS is seeing stronger demand across vacuum, power, plasma, reactive gas and photonics solutions used in deposition, etch, lithography, metrology and inspection applications. The company also expects to benefit from AI-led capacity spending, rising process complexity and stronger demand across DRAM, NAND and foundry/logic applications.

Advanced Energy is similarly exposed to AI-related wafer fab demand through its precision power and plasma power technologies. The company is seeing adoption of its eVoS, eVerest and NavX platforms, which are designed to improve throughput and yield at leading-edge nodes. Management expects these technologies to support market-share gains as they move into higher-volume production over the coming years.

While MKS and Advanced Energy benefit from the broader AI-led equipment cycle, KLA’s distinction lies in its focus on process control. Its exposure to inspection, metrology and yield optimization, combined with ongoing market-share gains and expanding advanced-packaging opportunities, gives KLA a more direct link to rising defect-control and manufacturing-precision needs. This supports its case for above-market growth through 2030.

KLA’s Stock Price Performance, Valuation & EstimatesShares of KLA have surged 146.1% over the past year compared with the industry’s growth of 65.2%.

KLA One-Year Price Performance
Image Source: Zacks Investment Research

From a valuation standpoint, KLA trades at a forward price-to-sales (P/S) multiple of 16.44, significantly below the industry’s average of 10.29.

KLA’s P/S Ratio (Forward 12-Month) vs. Industry
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for KLA’s fiscal 2026 earnings per share (EPS) implies a year-over-year increase of 11.4%. The EPS estimates for 2026 have increased in the past 60 days.

EPS Trend of KLA Stock
Image Source: Zacks Investment Research

KLA’s Zacks RankKLA stock currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A substantial analyst price target increase was the impetus behind KLA Corporation's (KLAC +4.19%) market-beating Wednesday. Although the semiconductor diagnostics company's shares still landed in the red that trading session, with a 0.2% decline, they performed better than the benchmark S&P 500 index, which fell by 1.6%.

A 25% improvement That raiser was Cantor Fitzgerald's C.J. Muse, who lifted his fair value assessment for KLA by 25% in advance of the company's 10-for-1 stock split (slated to occur this coming Friday). It's now $2,000 per share, up notably from his previous price target of $1,600. He maintained his overweight (read: buy) recommendation on the highly specialized chip stock.

Image source: Getty Images.

According to reports, Muse's adjustment stems from KLA management's recent raise in advanced packaging revenue guidance to $1 billion. Not surprisingly, the basis for this is higher demand coming from the immense need for smoothly functioning artificial intelligence (AI) hardware.

The analyst also waxed bullish about other corners of KLA's business, such as its more traditional DRAM and NAND segments.

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Fingers in several pies KLA is one of many niche but important companies participating in the AI revolution. This, combined with its solid and foundational business in legacy hardware, positions it well for growth in the coming quarters and years. Its stock feels like a good bet on the direction of the chip market these days.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends KLA. The Motley Fool has a disclosure policy.

Shares of semiconductor equipment makers moved higher after analysts raised expectations for the wafer fabrication equipment market, arguing that growing artificial intelligence investment continues to support long-term demand across the industry.

While chip stocks have come under pressure in recent sessions, analysts say the outlook remains favorable for companies that supply the tools needed to manufacture semiconductors.

Barclays reaffirmed its Overweight ratings on Applied Materials and KLA while raising its price targets on both companies.

The investment bank lifted its target on Applied Materials to $590 from $500 and increased its target on KLA to $2,250 from $1,700.

Barclays also maintained a Neutral rating on Lam Research and raised its price target to $335 from $275.

All three stocks have surged at least 75% this year.

On Thursday's session, Applied Materials AMAT gained 6.6%, KLA advanced 8.6%, and Lam Research rose 8.2%.

A key driver behind Barclays' bullish stance is its revised outlook for the wafer fabrication equipment market.

The bank increased its estimate for the total wafer fab equipment market to $154 billion from a prior forecast of $139 billion.

It now expects the market to grow another 36% to $209.5 billion in 2027, significantly higher than its previous estimate of $159 billion.

According to Barclays analyst Tom O'Malley, artificial intelligence remains the primary catalyst behind the stronger spending outlook.

"The capex cycle is much stronger across the board," wrote analyst Tom O'Malley.

The analyst pointed to heavy investment from memory manufacturers, including Micron Technology, SK Hynix, and Samsung Electronics.

Continued supply constraints and strong demand are also encouraging spending by advanced chip producers such as Taiwan Semiconductor Manufacturing and Intel.

These investments are expected to benefit equipment suppliers that provide the tools required to manufacture increasingly sophisticated semiconductors.

Applied Materials received additional support from other Wall Street firms.

Cantor Fitzgerald raised its price target on the stock to $650 from $575 while maintaining an Overweight rating.

The firm argued that Applied Materials is positioned at the center of a long-term expansion cycle in semiconductor manufacturing equipment.

According to Cantor, industry wafer fabrication equipment spending could approach $250 billion as the semiconductor market grows toward $3 trillion by 2029.

The brokerage also highlighted the company's long-term order visibility.

For traders, the key phrase is "bookings visibility into 2028."

Analysts often view extended order backlogs as a sign of durable demand, particularly in industries that have historically experienced cyclical swings.

UBS also raised its target on Applied Materials to $570 from $515 while reiterating a Buy rating.

Meanwhile, the company continues to invest in manufacturing capacity.

Applied Materials is spending approximately $500 million on a new campus in Singapore's Tampines region. The expansion is expected to more than double advanced cleanroom capacity and create around 1,000 jobs.

KLA shares have also benefited from growing confidence in long-term semiconductor equipment demand.

Investors are increasingly betting that spending on advanced chip manufacturing equipment will remain elevated as artificial intelligence drives investment at foundries and logic chip plants.

Analysts noted that customer bookings already extend into 2028, providing greater visibility into future demand.

Several Wall Street firms have responded by raising their price targets on KLA, reflecting expectations that the current spending cycle could persist for years.

Supporters of the sector argue that wafer fabrication equipment spending is entering a sustained, supply-constrained growth phase.

The combination of strong AI-related demand, extended order visibility, and increasing analyst optimism has helped fuel renewed buying interest in semiconductor equipment stocks despite recent volatility elsewhere in the chip sector.