KLA(KLAC) ZACKS·2025-01-09 18:01Stock Performance - KLA Corporation's shares have declined 23.1% in the past six months, underperforming the Zacks Computer & Technology sector's appreciation of 1.5% [1] - The company has underperformed peers such as Flex (37.1% gain), Garmin (29.3% gain), and Carrier Global (7.6% gain) over the same period [3] - However, KLA has outperformed the Zacks Electronics - Miscellaneous Products industry's decline of 38.2% [3] Segment Performance - Revenues from the PCB and Component Inspection segment saw a modest year-over-year increase of 1.4% but declined 1% sequentially in Q1 fiscal 2025 [1] Geopolitical and Market Challenges - KLA is navigating risks associated with export controls and geopolitical tensions, particularly in China [2] - China's revenue contribution is expected to drop from 42% to approximately 30% in 2025 [2] Financial Performance - Operating expenses rose to 7.63 per share, down 0.9% over the past 30 days but indicating 45.06% year-over-year growth [7] - The consensus mark for fiscal 2025 earnings is $30.37 per share, down 0.8% over the past 30 days but indicating a 27.93% increase compared with fiscal 2024 [7] Investment and Growth Initiatives - KLA is making significant investments in growth initiatives and new product development, focusing on wafer inspection, advanced packaging solutions, and AI-driven tools [4] - These investments have led to higher operating expenses, impacting profitability [5] Historical Performance - KLA has a history of strong quarterly performance, with earnings surpassing the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 6.02% [8] Industry Position - KLA faces uncertainty around capital spending, with demand not aligning with the markets it serves [6] - Its increasing ties to memory makers like Micron and Toshiba are not yet significant enough to make a big impact [6]