KLA Set to Report Q2 Earnings: How Should You Approach the Stock?

Core Viewpoint - KLA Corporation is set to report its second-quarter fiscal 2025 results, with expectations of strong revenue growth driven by demand in its wafer inspection business and advanced packaging portfolio, despite challenges in its China operations and PCB segment [1][5][6]. Revenue Expectations - KLA anticipates revenues of $2.95 billion, with a variance of$150 million, compared to the Zacks Consensus Estimate of $2.93 billion, reflecting a year-over-year increase of 17.98$500 million in revenues from its advanced packaging portfolio in calendar year 2024, indicating strong customer adoption [5]. Earnings Projections - KLA forecasts non-GAAP earnings of $7.75 per share, with a variance of 60 cents, while the consensus estimate stands at$7.73 per share, representing a year-over-year growth of 25.49% [3]. - The company has consistently surpassed the Zacks Consensus Estimate in the past four quarters, with an average surprise of 6.02% [3]. Market Dynamics - The performance in the second quarter is expected to benefit from robust demand for wafer inspection due to the increasing complexity of semiconductor devices and the adoption of advanced technologies [3]. - The services business is likely to see growth from a larger installed base and increased customer demand for maintenance and performance optimization [4]. Challenges - KLA faces challenges from export controls and geopolitical tensions, particularly affecting its operations in China, where revenue contribution is projected to decline from 42% to 30% in fiscal 2025 [5]. - The PCB and Component Inspection segment has struggled with consistent growth, which is expected to negatively impact the second-quarter performance [6].