KLA CorporationKLAC shares closed at $898.85 on Tuesday, very close to the 52-week high of $914.83, which it hit on June 17. KLAC shares have jumped 42.6% year to date (YTD), outperforming the Zacks Electronics – Miscellaneous Products industry’s and Zacks Computer and Technology sector’s growth of 12.3% and 6.8%, respectively.
The company’s shares have outperformed its industry peers, including GarminGRMN, Tokyo ElectronTOELY and SMC CorporationSMCAY over the same time frame. While Garmin and Tokyo Electron shares have appreciated 2.3% and 23.1%, SMC Corporation has declined 8.4% YTD.
KLA’s outperformance can be attributed to strong demand for EUV reticle inspection, substrate metrology and advanced process control tools, driving steady revenue growth. Increasing chip complexity and AI-driven design transitions are major tailwinds.
KLAC Stock Outperforms Sector & Industry
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KLAC Expands Packaging Tools to Support AI Growth
KLA’s capitalization on AI-led chip complexity is driving higher demand for advanced packaging solutions and next-generation inspection systems. Increasing die sizes and bandwidth requirements are supporting broader adoption of metrology tools across packaging workflows.
The company’s advanced packaging revenues are projected to exceed $850 million in 2025, up from the earlier estimate of $750 million. This increase reflects growing demand for KLAC’s solutions that enable 2.5D and 3D integration, advanced interconnect structures and heterogeneous architectures.
KLAC’s process control portfolio remains integral to ensuring yield and reliability at tighter geometries. With expanding investments in Foundry, Logic and DRAM to support AI workloads, KLAC is well-positioned to benefit from packaging-related equipment demand.
KLAC Scales EUV and Substrate Inspection Systems
Adoption of KLAC’s EUV and substrate inspection platforms is gaining momentum, driven by rising complexity at leading-edge nodes. Wafer inspection revenues surged 51% year over year to $1.5 billion in the third quarter of fiscal 2025, reflecting increased demand for defect detection and pattern fidelity in high-density designs. Wafer inspection accounted for 49% of revenues, which jumped 29.8% year over year to $3.06 billion in the reported quarter.
These tools are seeing broader traction across foundry and logic customers, advancing next-gen architectures for AI and high-performance workloads. Substrate inspection systems are also supporting tighter quality control in advanced packaging lines, where precision and yield are increasingly critical.
With growing EUV deployments and rising substrate complexity, KLAC is well-positioned to expand its inspection footprint across leading-edge customers.
KLA’s Offers Stable 4Q25 Outlook
KLA expects stable performance in the fourth quarter of fiscal 2025, supported by strong demand across Foundry, Logic and advanced packaging customers.
For fourth-quarter fiscal 2025, revenues are expected to be $3.075 billion, plus/minus $150 million. The company expects non-GAAP earnings of $8.53 per share, plus/minus 78 cents.
The Zacks Consensus Estimate for fourth-quarter fiscal 2025 revenues is pegged at $3.08 billion, indicating 19.74% year-over-year growth.
The consensus estimate for non-GAAP earnings is pegged at $8.53 per share, up by a penny over the past 30 days. This indicates growth of 29.24% on a year-over-year basis.
KLAC Stock is Currently Overvalued
KLAC shares are trading at a premium, as suggested by the Value Score of C. In terms of the forward 12-month price/sales (P/S), KLAC is trading at 9.83X, significantly higher than the industry’s 3.2X.
The stock is expensive than competitors like Garmin, Tokyo Electron and SMC Corp. Shares of Garmin, Tokyo Electron and SMC Corp. are currently trading at a P/S ratio of 5.74X, 4.86X and 3.95X, respectively.
KLAC Valuation
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Conclusion
KLAC is benefiting from sustained momentum in advanced packaging and AI-led semiconductor demand. Growing traction across EUV and substrate inspection systems, along with stable growth in the services business, is supporting revenue visibility. These drivers, backed by strong financials, help justify the stock’s premium valuation. KLAC’s expanding product base across core process equipment categories adds further support.
KLAC currently carries a Zacks Rank #2 (Buy) and a Growth Score of B, a favorable combination that offers a strong investment opportunity, per the Zacks Proprietary methodology. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).