KLA Corp. Operations I believe the build-out of regional Al factories will drive demand for more advanced nodes as competition for speed and power consumption becomes more frece. Many of the hyperscalers, including Microsoft Azure (MSFT) and Amazon AWS (AMZN) are designing their own accelerators in order to provide more tailored services in relation to data consumption and power efficiency. Despite the drive to bring Al to the edge on smartphones and PCs, I do not anticipate as much eapacity to be catered t ...

About KLA: All earnings disclosures as well as the live earnings webcast will be available on the Investor Relations page of KLA's website at ir.kla.com. A replay of the webcast will be posted after the event. KLA Corporation ("KLA") develops industry-leading equipment and services that enable innovation throughout the electronics industry. We provide advanced process control and process-enabling solutions for manufacturing wafers and reticles, integrated circuits, packaging and printed circuit boards. In c ...

Company Performance - KLA's stock closed at $830.03, reflecting a +0.27% change from the previous day, outperforming the S&P 500's gain of 0.23% [1] - Over the past month, KLA shares have increased by 8.96%, while the Computer and Technology sector has decreased by 2.01% [3] - The upcoming earnings disclosure is anticipated, with projected earnings per share (EPS) of $6.08, indicating a 12.59% increase year-over-year, and revenue forecasted at $2.5 billion, representing a 6.34% growth [4] Analyst Estimates - The consensus EPS projection for KLA has remained stagnant over the past 30 days, with a current Zacks Rank of 3 (Hold) [2] - Changes in analyst estimates are crucial as they reflect the evolving business landscape, with positive adjustments indicating a favorable outlook on the company's health and profitability [5] Valuation Metrics - KLA's Forward P/E ratio stands at 35.53, significantly higher than the industry average of 21.6, suggesting that KLA is trading at a premium [6] - The PEG ratio for KLA is 3.96, compared to the industry average of 2.73, indicating a higher valuation relative to expected earnings growth [6] Industry Context - KLA operates within the Electronics - Miscellaneous Products industry, which is part of the Computer and Technology sector, currently ranked 175 in the Zacks Industry Rank, placing it in the bottom 31% of all industries [7] - For the full year, analysts expect KLA to report earnings of $23.30 per share and revenue of $9.75 billion, reflecting declines of -8.16% and -7.13% from the previous year [8]

KLA Corporation Conference Call Summary Company Overview - KLA Corporation operates in the semiconductor industry, focusing on advanced packaging, electronics, and components [6][5] - The company reported a revenue of $9.7 billion in 2023, experiencing an 8% decline compared to the previous year, but expects stabilization and potential growth in the current year [6][6] Key Industry Insights - The semiconductor industry is undergoing significant changes driven by diversification, particularly due to the rise of AI, GPU, and high-bandwidth memory (HBM) technologies [9][11] - The demand for semiconductor capital equipment is projected to grow faster than GDP over the next five to ten years, fueled by the increasing integration of semiconductors in daily life [10][14] Advanced Packaging Focus - KLA has invested heavily in advanced packaging over the past four years, acquiring companies like ICOS, Orbotech, and SPTS to enhance its capabilities in this area [5][6] - Advanced packaging is critical for integrating multiple functions from different wafers into a single package, which is essential for meeting the performance and power requirements of modern devices [21][19] Technology and Market Drivers - The transition from traditional semiconductor manufacturing to advanced packaging techniques, such as heterogeneous integration and chiplets, is becoming increasingly important [20][22] - KLA is focusing on developing customized solutions for packaging, including inspection and metrology tools tailored for the unique challenges of packaging technology [27][29] Revenue Projections and Growth Opportunities - KLA anticipates a significant increase in packaging revenue, projecting it to reach between $450 million and $500 million in 2024, nearly doubling from previous figures [33][33] - The company sees substantial growth potential in the substrate market, which is expected to become a key growth engine in the near future [25][29] Data Analytics and Process Improvement - KLA is leveraging its expertise in data analytics to enhance packaging processes, aiming to create a feedback loop that improves efficiency and effectiveness in packaging operations [31][32] - The company is developing data analytical software and algorithms to capitalize on the unique challenges presented by packaging, which is not standardized like front-end semiconductor processes [32][32] Conclusion - KLA Corporation is strategically positioned in the semiconductor industry, focusing on advanced packaging as a key growth area driven by AI and other technological advancements [14][33] - The company's investments in acquisitions and technology development are expected to yield significant returns as the demand for sophisticated semiconductor solutions continues to rise [5][33]

Core Insights - KLA Corporation aims for a topline growth target of 9% to 11%, with expectations to reach $14 billion in sales and $38 in earnings by 2026 [1][34][26] - The company anticipates a mid-double-digit growth rate over the next couple of years, driven by increased investment in logic and foundry sectors [4][10] - KLA's service business is projected to grow at 12% to 14% through the cycle, supported by a high attach rate of over 90% for service contracts [3][7] Company Performance - KLA's systems business is expected to grow close to 10%, while the service business has shown resilience with mid-high single-digit growth despite lower utilization rates in the industry [3][7][9] - The company has a predictable service revenue stream, with about 75% of revenue coming from subscription-like contracts [3][8] - Gross margins are projected to be around 63%, with operating margins expected to exceed 42% as the company approaches its revenue targets [26][40] Market Dynamics - The wafer fab equipment (WFE) market is expected to see a recovery, with leading-edge investments driving demand, particularly in the context of AI and advanced packaging [19][20][66] - KLA's position in process control is significantly stronger than competitors, with a market share approximately five to six times larger than the nearest rival [35][64] - The company is preparing for growth in leading-edge investments, which require higher process control intensity compared to legacy investments [19][24][62] Future Outlook - KLA anticipates a favorable environment for DRAM and memory markets, with expectations of improved financial performance and supply-demand parity [32][74] - The company is focused on maintaining a strong supply chain to meet future demand, with lead times for products generally around nine months [57][72] - Advanced packaging is identified as a growth area, with KLA participating in various process steps that are expected to grow faster than overall WFE [66][69]

KLA Corporation Conference Call Summary Company Overview - **Company**: KLA Corporation (NASDAQ: KLAC) - **Industry**: Semiconductor Equipment Key Points and Arguments Financial Targets and Growth Expectations - KLA set a target of 9% to 11% topline growth, aiming for $14 billion in sales and $38 in earnings by 2026 [2][11] - Semiconductor revenue growth is projected at approximately 6% to 7%, with expectations of a $1 trillion semiconductor revenue market by 2030 [3][4] - The company anticipates a growth rate of 7% to 8% in the wafer fab equipment (WFE) market, driven by rising capital intensity [3] Market Dynamics and Investment Trends - The mix of logic/foundry WFE is expected to exceed 60%, which is crucial for KLA due to the higher process control intensity in this segment compared to memory [5][6] - KLA's position in process control is significantly stronger than competitors, with a market share approximately five to six times larger than the nearest competitor [6] - The company expects its systems business to grow around 10%, with service business growth updated to 12% to 14% through the cycle [7][12] Service Business Insights - KLA's service revenue is less correlated to WFE and more aligned with semiconductor revenue, providing a predictable revenue stream [14][18] - The service business has shown resilience, growing every year except for 2009, with a mid-high single-digit growth last year despite lower utilization rates in the industry [18][21] Market Outlook and Demand - The second half of 2024 is expected to show sequential growth, with mid-high single-digit growth anticipated in the WFE market [23][24] - Leading-edge investments are a significant driver for KLA, with expectations for growth in the 2-nanometer node and strong demand from high-performance computing (HPC) and AI sectors [25][26] - Memory market dynamics are improving, with signs of better financial performance and inventory management among memory customers [26] Advanced Packaging and Market Position - KLA's advanced packaging business is projected to grow from $400 million to potentially $450 million to $500 million, driven by AI market improvements [37][38] - The company participates in various advanced packaging processes, including plasma dicing and TSV formation, and is well-positioned to capitalize on increasing complexity in semiconductor packaging [39][41] Supply Chain and Capacity Management - KLA has invested in its supply chain to ensure capacity for future demand, with lead times for products generally around nine months [50][51] - The company is prepared for strong demand in 2025, particularly in foundry/logic investments and improving memory dynamics [52] Additional Important Insights - KLA's service contracts are primarily subscription-based, contributing to predictable revenue streams [7][12] - The company has made strategic decisions to exit less profitable segments, such as the flat-panel business, to focus on higher-growth areas [9] - KLA's gross margins are expected to remain strong, with a target of 63% plus as the company scales its operations [11]

Group 1 - KLA (KLAC) has recently reached a key level of support and has overtaken the 20-day moving average, indicating a short-term bullish trend [1] - The 20-day simple moving average (SMA) is a popular tool among traders as it smooths out price fluctuations and can signal trend reversals more effectively than longer-term averages [1] - KLAC has gained 9.5% over the past four weeks and is currently ranked Zacks Rank 3 (Hold), suggesting potential for further upward movement [3] Group 2 - There have been no earnings estimate reductions for KLAC in the past two months, while 8 estimates have been raised for the current fiscal year, leading to an increase in the consensus estimate [3] - The combination of the positive technical indicators and favorable earnings estimate revisions makes KLAC a candidate for investors' watchlists [3]

Industry and Company Overview * **Industry**: Semiconductor equipment spending environment, wafer equipment (WFE), process control, and specialty segments. * **Company**: KLA Corporation (NASDAQ: KLAC), a leading provider of process control and inspection solutions for the semiconductor industry. * **Key Participants**: Bren Higgins, Executive Vice President and CFO of KLA, and Harlan Sur, Semiconductor and Semiconductor Capital Equipment Analyst at J.P. Morgan. Key Points and Arguments * **2024 Industry Outlook**: The semiconductor industry is expected to experience a transitional year in 2024, following a strong 2023. WFE spending is projected to remain flat to slightly up, with a total of approximately $90 billion in 2023 and a similar outlook for 2024. * **KLA's Growth Outlook**: KLA expects sequential growth throughout 2024, with high single-digit growth in the second half compared to the first half. The company's service business is expected to grow between $250 million and $300 million, while the EPC business is projected to grow modestly in the mid to high single digits. * **Process Control**: KLA's process control business is expected to grow as the industry transitions to more advanced nodes and technologies. The company's strong position in optical inspection and other key areas positions it well for growth. * **Advanced Packaging**: KLA has a strong position in advanced packaging, with a $400 million annualized revenue run rate. The company expects this market to grow significantly over the next few years, driven by increasing complexity and demand for higher-value solutions. * **Services**: KLA's services business has been a key driver of resilience during downturns. The company expects this business to reaccelerate to its long-term growth target of 12% to 14% CAGR over the next few years. * **Financial Targets**: KLA remains confident in its financial targets for 2026, including $14 billion in revenues, 63% gross margins, and $38 in earnings power. Additional Important Points * **Supply Chain**: KLA has faced supply chain challenges, particularly in optical pattern inspection, but is working to improve capacity and meet demand. * **China**: KLA has faced market access restrictions in China, but remains confident in its position and ability to win business. * **Competitive Landscape**: KLA maintains a strong market share position in process control, with a significant lead over its competitors. The company expects this position to continue to strengthen as it invests in R&D and product innovation. * **Investment in R&D**: KLA continues to invest heavily in R&D, focusing on new technologies and solutions to meet the evolving needs of the semiconductor industry.

Group 1 - KLA Corporation announced participation in several upcoming investor conferences, including the J.P. Morgan 52nd Annual Global Technology, Media and Communications Conference on May 21, 2024, the BofA Securities 2024 Global Technology Conference on June 6, 2024, and the Nasdaq Investor Conference in Partnership with Jefferies on June 11, 2024 [1] - The live webcasts of these conferences will be accessible on KLA's Investor Relations page, with replays available after the events [1] - KLA Corporation develops advanced equipment and services for the electronics industry, focusing on process control and enabling solutions for manufacturing wafers, integrated circuits, packaging, and printed circuit boards [2]

Core Insights - KLA (NASDAQ:KLAC) is distinct from other major equipment companies, focusing on "metrology and inspection" equipment rather than "processing" equipment [1] - KLA's equipment is essential for yield enhancement in semiconductor manufacturing, enabling defect detection and classification at various production stages [2][24] - KLA reported an EPS of $5.26 for Q3 2024, exceeding analyst estimates, with revenue of $2.36 billion, surpassing expectations by 2.16% [3] Financial Performance - KLA's guidance for Q4 fiscal 2024 anticipates total revenue between $2.50 billion +/- $125 million, compared to a consensus of $2.43 billion [4] - KLA's revenue growth was -5.5% in 2023, outperforming the overall WFE semiconductor equipment market, which declined by -9.0% to $86.6 billion [14] Market Position - KLA holds a dominant position in the metrology and inspection market, with a market share significantly larger than competitors like Applied Materials [21] - KLA's market share in the Wafer Inspection/Defect Review segment is 73%, while it holds 34% in Lithography Metrology and 58% in Thin Film Metrology [9][10][12] Growth Opportunities - KLA's revenues from China increased to 38% of overall revenues, amounting to $2.659 billion in 2023, up from 29% ($2.378 billion) in 2022 [16] - Planned fab construction in China for chip manufacturing at the 28nm node and above represents a significant growth opportunity for KLA, with total fab spending projected at $67.566 billion [18] Industry Trends - The increasing complexity of semiconductor chips is driving demand for KLA's advanced process control solutions, particularly as the industry shifts towards sophisticated architectures [22] - The average selling prices (ASPs) for wafers increase with decreasing node size, indicating that defects at smaller nodes have a greater financial impact [25]