KLA (NASDAQ:KLAC) Raised to Strong-Buy at Zacks Research

Key Points

• Zacks Research upgraded KLA to “Strong Buy” from “Hold,” while the broader analyst consensus remains “Moderate Buy” with an average price target of $223.70.
• KLA exceeded quarterly expectations, reporting $1.05 in EPS and $3.66 billion in revenue, with revenue rising 15.2% year over year. The company expects advanced-packaging revenue to grow more than 70% in 2026, driven by demand for AI chips.
• Despite strong fundamentals, KLA faces valuation and outlook risks: the stock trades at roughly 50 times earnings, and shares have remained under pressure as investors weigh uncertainty around future AI-driven growth.

KLA (NASDAQ:KLAC - Get Free Report) was upgraded by research analysts at Zacks Research from a "hold" rating to a "strong-buy" rating in a research note issued on Thursday,Zacks.com reports.

A number of other equities analysts have also recently issued reports on KLAC. New Street Research increased their price target on KLA from $146.00 to $177.00 and gave the stock a "neutral" rating in a report on Wednesday, April 29th. UBS Group set a $240.00 target price on shares of KLA and gave the stock a "neutral" rating in a research note on Monday, July 20th. Needham & Company LLC reaffirmed a "buy" rating and issued a $270.00 price target on shares of KLA in a research note on Wednesday. Citigroup reissued a "buy" rating on shares of KLA in a research report on Wednesday, June 17th. Finally, Berenberg Bank boosted their target price on KLA from $177.00 to $200.00 and gave the company a "buy" rating in a research report on Thursday, April 30th. One investment analyst has rated the stock with a Strong Buy rating, nineteen have given a Buy rating and nine have given a Hold rating to the company's stock. According to data from MarketBeat.com, the company presently has a consensus rating of "Moderate Buy" and an average target price of $223.70.

KLA Stock Performance

Shares of KLA stock opened at $182.82 on Thursday. The company has a current ratio of 2.88, a quick ratio of 2.11 and a debt-to-equity ratio of 0.93. The business has a 50-day moving average price of $223.79 and a two-hundred day moving average price of $181.51. KLA has a 1-year low of $83.22 and a 1-year high of $307.37. The company has a market cap of $238.81 billion, a P/E ratio of 49.86, a PEG ratio of 1.40 and a beta of 1.41.

KLA (NASDAQ:KLAC - Get Free Report) last announced its quarterly earnings data on Tuesday, July 28th. The semiconductor company reported $1.05 earnings per share (EPS) for the quarter, beating analysts' consensus estimates of $1.00 by $0.05. KLA had a return on equity of 87.66% and a net margin of 35.57%.The company had revenue of $3.66 billion for the quarter, compared to the consensus estimate of $3.61 billion. During the same period in the previous year, the business earned $0.94 EPS. The firm's revenue was up 15.2% compared to the same quarter last year. KLA has set its Q1 2027 guidance at 1.060-1.260 EPS. As a group, analysts anticipate that KLA will post 5.37 EPS for the current year.

Insider Buying and Selling

In related news, EVP Mary Beth Wilkinson sold 14,392 shares of the company's stock in a transaction that occurred on Wednesday, July 1st. The stock was sold at an average price of $285.30, for a total value of $4,106,037.60. Following the transaction, the executive vice president directly owned 53,367 shares of the company's stock, valued at approximately $15,225,605.10. This represents a 21.24% decrease in their position. The transaction was disclosed in a legal filing with the SEC, which can be accessed through this hyperlink. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, CEO Richard P. Wallace sold 45,120 shares of the business's stock in a transaction on Thursday, June 11th. The shares were sold at an average price of $221.34, for a total transaction of $9,986,725.44. Following the sale, the chief executive officer owned 713,830 shares of the company's stock, valued at approximately $157,996,990.71. This represents a 5.95% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. Insiders have sold 132,333 shares of company stock worth $29,547,170 in the last 90 days. Insiders own 91.48% of the company's stock.

Institutional Inflows and Outflows

A number of institutional investors have recently made changes to their positions in KLAC. Handelsbanken Fonder AB grew its position in KLA by 978.2% in the second quarter. Handelsbanken Fonder AB now owns 858,984 shares of the semiconductor company's stock worth $259,164,000 after acquiring an additional 779,317 shares in the last quarter. Wedge Capital Management L L P NC grew its stake in KLA by 781.5% in the second quarter. Wedge Capital Management L L P NC now owns 359,277 shares of the semiconductor company's stock worth $108,397,000 after purchasing an additional 318,520 shares in the last quarter. Bessemer Group Inc. grew its position in shares of KLA by 0.7% during the 1st quarter. Bessemer Group Inc. now owns 180,279 shares of the semiconductor company's stock worth $265,444,000 after buying an additional 1,291 shares in the last quarter. Clal Insurance Enterprises Holdings Ltd increased its stake in shares of KLA by 151.2% during the first quarter. Clal Insurance Enterprises Holdings Ltd now owns 116,292 shares of the semiconductor company's stock valued at $171,230,000 after buying an additional 70,000 shares during the period. Finally, Cornerstone Investment Partners LLC lifted its stake in KLA by 0.4% in the fourth quarter. Cornerstone Investment Partners LLC now owns 96,846 shares of the semiconductor company's stock worth $117,676,000 after acquiring an additional 374 shares during the period. Hedge funds and other institutional investors own 86.65% of the company's stock.

Key KLA News

Here are the key news stories impacting KLA this week:

• Positive Sentiment: Upgraded to Strong Buy: Zacks raised KLA to a Rank #1 (Strong Buy), citing improving earnings prospects. KLAC was also included on Zacks’ momentum and new Strong Buy lists. KLA upgraded to Strong Buy
• Positive Sentiment: Analyst support strengthened: JPMorgan lifted its price target to $238, while Needham reaffirmed its Buy rating and Cantor Fitzgerald assigned an Overweight rating. TD Cowen also maintained a $260 Buy-rated target, supported by accelerating growth and advanced packaging opportunities. JPMorgan raises KLA price target
• Positive Sentiment: AI and advanced packaging demand: KLA expects advanced-packaging revenue to rise more than 70% in 2026 as increasingly complex AI chips drive demand for inspection, metrology and yield-management equipment. Its latest quarter also exceeded consensus estimates for earnings and revenue, with revenue up 15.2% year over year. KLA advanced packaging growth
• Positive Sentiment: Favorable sector flows: Semiconductor ETFs attracted substantial new investor money this week as strong technology earnings fueled a chip-stock rally, creating a supportive backdrop for KLAC. Semiconductor ETFs draw cash
• Neutral Sentiment: Industry analysts argue semiconductor oversupply is unlikely before 2028 because the infrastructure required for excess capacity is not yet in place, supporting long-term equipment demand but not providing a company-specific catalyst. Semiconductor oversupply outlook
• Negative Sentiment: Despite the earnings beat and higher guidance, KLAC faced pressure after results as investors focused on uncertainty around the outlook. Its roughly 50 forward earnings multiple also leaves the stock vulnerable if AI-related growth expectations moderate. KLA earnings and stock reaction

About KLA

KLA is a provider of process control and yield management solutions for the semiconductor and related microelectronics industries. The company designs and manufactures equipment, software and services used by chipmakers to analyze and control manufacturing processes, detect defects, measure critical dimensions and improve yield across wafer fabrication, photomask and packaging operations. KLA's offerings are aimed at enabling production of advanced logic, memory, and specialty devices at progressively smaller technology nodes and more complex package structures.

Its product portfolio includes optical and e-beam inspection systems, metrology tools for critical dimension and film measurement, mask and reticle inspection platforms, as well as enterprise software and data analytics that aggregate process data and drive automated process control.

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