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Can KLA Corp's Growing Semiconductor Process Control Drive the Stock?
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KLA Corporation's (KLAC - Free Report) second-quarter fiscal 2025 Semiconductor Process Control revenues reached $2.76 billion, surpassing the Zacks Consensus Estimate by 5.17%. The segment posted a strong 25.6% year-over-year increase and grew 7% sequentially.
In the reported quarter, KLAC’s adjusted earnings of $8.20 per share exceeded the Zacks Consensus Estimate by 6.08%. The earnings figure increased 11.9% year over year.
Revenues reported $3.08 billion, reflecting 23.7% year-over-year growth and surpassing the Zacks Consensus Estimate by 4.88%.
Click here to check the details of KLA Corp's second-quarter fiscal 2025 results.
KLA Corp’s Semiconductor Process Control Powers Strong Prospects
KLAC primarily operates in three key reportable segments — Semiconductor Process Control, which represents 89.6% of the total revenues, Specialty Semiconductor Process, and PCB and Component Inspection, both contributing 5.2% each.
The largest and most significant segment for KLA Corp, Semiconductor Process Control, generated revenues of $2.76 billion, reflecting a 26% year-over-year increase. The rise was driven by increased demand for advanced semiconductor manufacturing solutions, particularly in the areas of AI, high-performance computing and advanced packaging.
KLA Corp’s advanced packaging revenues reached approximately $500 million in calendar year 2024. The metric is projected to exceed $800 million in calendar year 2025, which has been raised from the previously mentioned $750 million.
Key Factors to Drive KLAC Stock
In Foundry/Logic, ongoing scaling, new technology, larger die size and increasing capital intensity are key growth drivers. In DRAM, investments in AI and high bandwidth memory, which require high performance and complex logic, are driving demand. This, along with improving supply and demand balance, positions the DRAM market for growth and is expected to increase wafer fab equipment investment in 2025.
In the reported quarter, KLA Corp observed strong growth in advanced packaging, driven by AI and high-performance computing investments. The demand for more powerful chip systems is boosting the need for complex chip integration, increasing the value of process control and fueling the company’s growth in this market. Customer adoption of KLAC’s advanced packaging products highlights the success of its diversification and growth strategies.
KLA Corp Provides Stable 3Q25 Guidance
KLAC’s upbeat third-quarter fiscal 2025 forecast is led by strong demand for chipmaking tools, driving top and bottom-line growth. This positions the company for continued success.
For third-quarter fiscal 2025, revenues are expected to be $3.0 billion, plus/minus $150 million. The Zacks Consensus Estimate for revenues is pegged at $3.01 billion, indicating 27.57% year-over-year growth.
KLA Corp expects non-GAAP earnings of $8.05 per share, plus/minus 60 cents. The Zacks Consensus Estimate for non-GAAP earnings is pegged at $7.80 per share, down 0.6% over the past 60 days. This indicates growth of 48.29% on a year-over-year basis.
Despite strong performance in key segments, KLA Corp faces significant challenges due to geopolitical risks, particularly the impact of U.S. export controls on its business in China, which accounts for 36% of its revenues. Ongoing supply-chain disruptions and semiconductor market volatility add uncertainty. These factors could affect KLAC’s growth trajectory and operational stability, posing risks to its performance.
KLA Corp continues to estimate the recent export controls in China to impact its revenues in calendar year 2025 by $500 million. About 70% of this impact is expected to affect the company's systems business.
The company’s shares have appreciated 20.1% in the trailing 12 months, significantly underperforming the Zacks Computer and Technology sector’s return of 25.1%.
Following the results, KLAC shares have fallen 0.6%.
Image: Bigstock
Can KLA Corp's Growing Semiconductor Process Control Drive the Stock?
KLA Corporation's (KLAC - Free Report) second-quarter fiscal 2025 Semiconductor Process Control revenues reached $2.76 billion, surpassing the Zacks Consensus Estimate by 5.17%. The segment posted a strong 25.6% year-over-year increase and grew 7% sequentially.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
In the reported quarter, KLAC’s adjusted earnings of $8.20 per share exceeded the Zacks Consensus Estimate by 6.08%. The earnings figure increased 11.9% year over year.
Revenues reported $3.08 billion, reflecting 23.7% year-over-year growth and surpassing the Zacks Consensus Estimate by 4.88%.
KLA Corporation Revenue (TTM)
KLA Corporation revenue-ttm | KLA Corporation Quote
Click here to check the details of KLA Corp's second-quarter fiscal 2025 results.
KLA Corp’s Semiconductor Process Control Powers Strong Prospects
KLAC primarily operates in three key reportable segments — Semiconductor Process Control, which represents 89.6% of the total revenues, Specialty Semiconductor Process, and PCB and Component Inspection, both contributing 5.2% each.
The largest and most significant segment for KLA Corp, Semiconductor Process Control, generated revenues of $2.76 billion, reflecting a 26% year-over-year increase. The rise was driven by increased demand for advanced semiconductor manufacturing solutions, particularly in the areas of AI, high-performance computing and advanced packaging.
KLA Corp’s advanced packaging revenues reached approximately $500 million in calendar year 2024. The metric is projected to exceed $800 million in calendar year 2025, which has been raised from the previously mentioned $750 million.
Key Factors to Drive KLAC Stock
In Foundry/Logic, ongoing scaling, new technology, larger die size and increasing capital intensity are key growth drivers. In DRAM, investments in AI and high bandwidth memory, which require high performance and complex logic, are driving demand. This, along with improving supply and demand balance, positions the DRAM market for growth and is expected to increase wafer fab equipment investment in 2025.
In the reported quarter, KLA Corp observed strong growth in advanced packaging, driven by AI and high-performance computing investments. The demand for more powerful chip systems is boosting the need for complex chip integration, increasing the value of process control and fueling the company’s growth in this market. Customer adoption of KLAC’s advanced packaging products highlights the success of its diversification and growth strategies.
KLA Corp Provides Stable 3Q25 Guidance
KLAC’s upbeat third-quarter fiscal 2025 forecast is led by strong demand for chipmaking tools, driving top and bottom-line growth. This positions the company for continued success.
For third-quarter fiscal 2025, revenues are expected to be $3.0 billion, plus/minus $150 million. The Zacks Consensus Estimate for revenues is pegged at $3.01 billion, indicating 27.57% year-over-year growth.
KLA Corp expects non-GAAP earnings of $8.05 per share, plus/minus 60 cents. The Zacks Consensus Estimate for non-GAAP earnings is pegged at $7.80 per share, down 0.6% over the past 60 days. This indicates growth of 48.29% on a year-over-year basis.
Geopolitical Risks Impacting KLAC's Growth Potential
Despite strong performance in key segments, KLA Corp faces significant challenges due to geopolitical risks, particularly the impact of U.S. export controls on its business in China, which accounts for 36% of its revenues. Ongoing supply-chain disruptions and semiconductor market volatility add uncertainty. These factors could affect KLAC’s growth trajectory and operational stability, posing risks to its performance.
KLA Corp continues to estimate the recent export controls in China to impact its revenues in calendar year 2025 by $500 million. About 70% of this impact is expected to affect the company's systems business.
The company’s shares have appreciated 20.1% in the trailing 12 months, significantly underperforming the Zacks Computer and Technology sector’s return of 25.1%.
Following the results, KLAC shares have fallen 0.6%.
Zacks Rank & Upcoming Earnings to Watch
Currently, KLA Corp has a Zacks Rank #3 (Hold).
InterDigital (IDCC - Free Report) , Fortinet (FTNT - Free Report) and Pitney Bowes (PBI - Free Report) are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector. The three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
InterDigital shares have appreciated 77.9% in the trailing 12 months. IDCC is set to report its fourth-quarter 2024 results on Feb. 6.
Fortinet shares have returned 48.6% in the trailing 12 months. FTNT is about to report its fourth-quarter fiscal 2024 results on Feb. 6.
Pitney Bowes shares skyrocketed 138.3% in the trailing 12 months. PB is set to report its fourth-quarter 2024 results on Feb. 11.