Core Viewpoint - KLA Corporation (KLAC) has shown strong stock performance, gaining 15.4% year to date, significantly outperforming the broader Zacks Computer and Technology sector and its industry peers [1][2]. Group 1: Stock Performance - KLAC's shares have outperformed the Zacks Computer and Technology sector, which has declined by 7.9%, and the Electronics - Miscellaneous Products industry, which has slipped by 0.7% [1]. - Year to date, Garmin shares have returned 1.9%, while Flex and Rockwell Automation have declined by 5.2% and 9.5%, respectively [1]. Group 2: Growth Drivers - The momentum in KLAC shares is driven by robust growth in AI and high-performance computing (HPC), alongside strength in advanced packaging and a resilient services segment [2]. - KLAC's differentiated portfolio is designed to address the complexities in semiconductor manufacturing, positioning the company to capitalize on rising semiconductor demand [3]. Group 3: Advanced Packaging Solutions - KLAC's advanced packaging revenues grew to approximately $500 million in calendar year 2024 and are projected to exceed $800 million in calendar 2025, reflecting strong demand [4]. - Advanced inspection and metrology systems are critical for ensuring high-quality semiconductor production by detecting defects at the nanometer scale [5]. Group 4: Financial Estimates - The Zacks Consensus Estimate for third-quarter fiscal 2025 revenues is $3.01 billion, indicating a 27.4% year-over-year growth [6]. - The Zacks Consensus Estimate for fiscal 2025 revenues is pegged at $11.91 billion, indicating year-over-year growth of 21.35% [6]. - The consensus mark for fiscal 2025 earnings is $31.59 per share, implying a 33.07% year-over-year increase [7]. Group 5: Challenges - Newly imposed U.S. export restrictions on China are expected to create significant financial challenges for KLAC in 2025, with a projected revenue reduction of $500 million and a 20% decline in China-related sales [8]. - The company anticipates its effective tax rate to rise to 14% in the second half of 2025 due to global tax policy changes, which may pressure net income and overall profitability [9].

KLA (KLAC) closed the latest trading day at $706.49, indicating a -1.39% change from the previous session's end. The stock's performance was behind the S&P 500's daily gain of 0.08%. Elsewhere, the Dow gained 0.08%, while the tech-heavy Nasdaq added 0.52%.The maker of equipment for manufacturing semiconductors's stock has dropped by 7.87% in the past month, exceeding the Computer and Technology sector's loss of 12.04% and lagging the S&P 500's loss of 7.33%.Analysts and investors alike will be keeping a clo ...

Investors often turn to recommendations made by Wall Street analysts before making a Buy, Sell, or Hold decision about a stock. While media reports about rating changes by these brokerage-firm employed (or sell-side) analysts often affect a stock's price, do they really matter?Before we discuss the reliability of brokerage recommendations and how to use them to your advantage, let's see what these Wall Street heavyweights think about KLA (KLAC) .KLA currently has an average brokerage recommendation (ABR) of ...

KLA (KLAC) closed the most recent trading day at $681.50, moving +0.16% from the previous trading session. The stock exceeded the S&P 500, which registered a loss of 0.91% for the day. Elsewhere, the Dow lost 1.5%, while the tech-heavy Nasdaq lost 1.96%.The maker of equipment for manufacturing semiconductors's stock has dropped by 9.35% in the past month, exceeding the Computer and Technology sector's loss of 10.57% and lagging the S&P 500's loss of 7.38%.The investment community will be closely monitoring ...

First Principles Partners is an equity research analyst specializing in technology, innovation, and sustainability investment. My unique approach, "First Principles," involves breaking down complex problems to their most basic elements in terms of financial and technology, enabling me to uncover overlooked investment opportunities.With a strong background in investment, private equity and venture capital, I have a proven track record of delivering strong returns for readers. Articles on Seeking Alpha focus ...

For those looking to find strong Computer and Technology stocks, it is prudent to search for companies in the group that are outperforming their peers. KLA (KLAC) is a stock that can certainly grab the attention of many investors, but do its recent returns compare favorably to the sector as a whole? A quick glance at the company's year-to-date performance in comparison to the rest of the Computer and Technology sector should help us answer this question.KLA is a member of the Computer and Technology sector. ...

Company Performance - KLA's stock closed at $708.84, reflecting a +1.38% change from the previous trading day, but lagged behind the S&P 500's gain of 1.59% [1] - The stock has decreased by 5.83% over the past month, underperforming the Computer and Technology sector's loss of 3.43% and the S&P 500's loss of 2.42% [1] Upcoming Earnings - KLA is expected to report an EPS of $8.07, indicating a 53.42% growth year-over-year, with revenue projected at $3.01 billion, a 27.4% increase compared to the same quarter last year [2] - For the entire fiscal year, earnings are estimated at $31.59 per share and revenue at $11.91 billion, reflecting changes of +33.07% and +21.35% respectively from the previous year [3] Analyst Estimates and Rankings - Recent estimate changes for KLA are seen as a positive indicator of the company's business outlook, with the Zacks Consensus EPS estimate moving 4.1% higher over the past month [5] - KLA currently holds a Zacks Rank of 2 (Buy), indicating a favorable investment outlook [5] Valuation Metrics - KLA is trading at a Forward P/E ratio of 22.13, which is a premium compared to the industry's average Forward P/E of 19.49 [6] - The company has a PEG ratio of 1.42, aligning with the Electronics - Miscellaneous Products industry's average PEG ratio of 1.42 [6] Industry Context - The Electronics - Miscellaneous Products industry, part of the Computer and Technology sector, ranks 158 out of over 250 industries, placing it in the bottom 38% [7] - Historically, the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]

Core Viewpoint - KLA Corporation (KLAC) has significantly outperformed its peers and the broader market in 2023, driven by strong demand for advanced semiconductor technologies and AI applications [1][2][17]. Financial Performance - In the second quarter of fiscal 2025, KLAC's revenues reached $3.08 billion, exceeding the guidance midpoint of $2.95 billion, attributed to rising demand for advanced semiconductor equipment and services [5]. - For the third quarter of fiscal 2025, revenues are projected to be $3.0 billion, with non-GAAP earnings expected at $8.05 per share, indicating strong growth potential [12]. Market Position and Growth Drivers - KLAC's growth is fueled by strong demand for leading-edge logic, high-bandwidth memory, and advanced packaging solutions, particularly in the context of AI-driven semiconductor demand [2][8]. - The company's advanced packaging revenues are expected to grow from approximately $500 million in 2024 to over $800 million in 2025, driven by the need for heterogeneous chip integration [7]. Product and Service Innovations - KLAC has introduced a comprehensive suite of process control solutions for integrated circuit (IC) substrate manufacturing, enhancing its competitive edge in the market [9]. - The company's portfolio, including the Corus and Serena direct imaging platforms, aims to optimize yield and profitability for customers in the advanced packaging sector [10]. Valuation and Investment Outlook - Despite strong performance, KLAC's stock is considered overvalued, with a forward price/sales ratio of 8.37X compared to the industry average of 3.68X [14]. - The company maintains a Zacks Rank 2 (Buy), suggesting it is an attractive investment opportunity for potential investors [18].

Core Insights - Zacks Premium provides various tools for investors to enhance their stock market engagement and confidence [1][2] Zacks Style Scores - Zacks Style Scores are indicators that assist investors in selecting stocks likely to outperform the market within 30 days, rated from A to F based on value, growth, and momentum characteristics [3] - The Value Score focuses on identifying undervalued stocks using financial ratios like P/E and Price/Sales [4] - The Growth Score emphasizes a company's financial health and future growth potential, analyzing projected and historical earnings and cash flow [5] - The Momentum Score helps investors capitalize on price trends, utilizing factors like weekly price changes and monthly earnings estimate shifts [6] - The VGM Score combines all three Style Scores, providing a comprehensive view of stocks with attractive value, growth forecasts, and momentum [7] Zacks Rank - The Zacks Rank is a proprietary model that uses earnings estimate revisions to simplify portfolio building, with 1 (Strong Buy) stocks achieving an average annual return of +25.41% since 1988, significantly outperforming the S&P 500 [8][9] - There are over 800 stocks rated 1 or 2, making it essential for investors to select those with high Style Scores for optimal success [10] Stock Highlight: KLA Corporation - KLA Corporation, based in San Jose, CA, specializes in process diagnostics and control equipment for semiconductor manufacturing [12] - KLA holds a 2 (Buy) rating on the Zacks Rank, with a VGM Score of B and a Momentum Style Score of A, having seen a 7.2% increase in shares over the past month [13] - Recent upward revisions in earnings estimates by seven analysts for fiscal 2025 have raised the Zacks Consensus Estimate by $0.88 to $31.59 per share, with an average earnings surprise of 6.4% [13][14]

Core Insights - KLA Corporation's second-quarter fiscal 2025 Semiconductor Process Control revenues reached $2.76 billion, exceeding the Zacks Consensus Estimate by 5.17% and reflecting a 25.6% year-over-year increase [1][4] - The company's adjusted earnings of $8.20 per share surpassed the Zacks Consensus Estimate by 6.08%, marking an 11.9% year-over-year growth [2] - Total revenues for the quarter were reported at $3.08 billion, showing a 23.7% year-over-year growth and exceeding the Zacks Consensus Estimate by 4.88% [2] Revenue Segments - KLA operates primarily in three segments: Semiconductor Process Control (89.6% of total revenues), Specialty Semiconductor Process, and PCB and Component Inspection (both contributing 5.2% each) [3] - The Semiconductor Process Control segment generated revenues of $2.76 billion, reflecting a 26% year-over-year increase driven by demand for advanced semiconductor manufacturing solutions, particularly in AI and high-performance computing [4] Advanced Packaging Growth - Advanced packaging revenues reached approximately $500 million in calendar year 2024 and are projected to exceed $800 million in calendar year 2025, an increase from the previously estimated $750 million [5] Market Drivers - Key growth drivers include ongoing scaling, new technology, larger die sizes, and increasing capital intensity in Foundry/Logic, along with investments in AI and high bandwidth memory in DRAM [6] - Strong growth in advanced packaging is attributed to investments in AI and high-performance computing, which are increasing the demand for complex chip integration [7] Future Guidance - For the third quarter of fiscal 2025, KLA expects revenues to be around $3.0 billion, plus or minus $150 million, indicating a 27.57% year-over-year growth [8] - Non-GAAP earnings are expected to be $8.05 per share, plus or minus 60 cents, reflecting a 48.29% year-over-year growth [9] Geopolitical Challenges - KLA faces significant challenges due to geopolitical risks, particularly U.S. export controls affecting its business in China, which accounts for 36% of its revenues [11] - The company estimates a $500 million revenue impact from recent export controls in China for calendar year 2025, with 70% of this impact expected to affect its systems business [12]