Jefferies Upgrades KLA (KLAC) to Buy, Sees Run Just Beginning

Core Viewpoint - KLA Corporation is highlighted as a key player in the AI sector, with Jefferies upgrading its rating to "Buy" and increasing the price target to $1,500, indicating a strong outlook driven by AI accelerator demand and advanced packaging needs [1][4]. Group 1: Company Performance and Outlook - Jefferies believes KLA's growth is just beginning, driven by expanding use cases for AI accelerators and a robust demand for leading-edge and advanced packaging [1]. - The firm sees potential upside for KLA due to increasing chip complexity and rising process control intensity, which aligns with KLA's strengths [2]. - KLA's business model benefits from the rising complexity in packaging, which requires enhanced process control [3]. Group 2: Market Dynamics and Risks - While there are concerns regarding exposure to China, KLA's revenues from China are considered relatively derisked at 25% for C26, with historical data suggesting potential upside [4]. - The semiconductor industry continues to guide conservatively on China, yet demand remains strong, indicating resilience in the market [4].