Can KLA Corp's Growing Semiconductor Process Control Drive the Stock?

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]