Key Stats for KLA Corporation Stock
- Price Change: +8.3%
- Current Price: ~$1,442
- Advanced Model Target: $1,695
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What Happened?
Shares of KLA Corporation (KLA) surged 8.3% to close at $1,442 on Friday, riding a wave of buying across the semiconductor equipment sector.
The rally was sparked by a series of bullish reports on global fab construction, driven by the insatiable demand for AI chips from hyperscalers like Amazon and Microsoft.
Furthermore, investors are realizing that every new “AI Factory” requires billions of dollars in process control equipment to ensure that the complex chips being produced actually work.
KLA is the dominant player in this niche, owning a near-monopoly on the tools used to inspect wafers for defects, making it an unavoidable beneficiary of the spending boom.
Additionally, the move coincided with strong gains in peers Lam Research (NASDAQ:LRCX) and Applied Materials (NASDAQ:AMAT)
This confirmed that institutional money is flowing into the “picks and shovels” of the industry.
Moreover, analysts at Goldman Sachs have maintained a Neutral rating, but other firms like Citigroup recently boosted their targets to as high as $1,800.
Despite the high stock price, the company recently declared a quarterly dividend of $1.90, underscoring its ability to return cash to shareholders even during aggressive growth cycles.
With the stock now within striking distance of its all-time highs, the momentum suggests that the market is pricing in a “super-cycle” that could last well into 2027.
See analysts’ growth forecasts and price targets for KLA Corporation stock (It’s free!) >>>
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During the earnings call, CEO Rick Wallace highlighted the resilience of the business model amidst the broader industry recovery.
He stated: “Process control is becoming more critical… customers are focused on yield, and that drives demand for our portfolio.”
Regarding the supply chain, management noted that while demand is high, they are successfully navigating constraints to meet customer timelines.
CFO Bren Higgins added: “We are seeing strong traction in our advanced packaging solutions… enabling the next generation of AI devices.”
The leadership team is confident that their “market leader” premium is justified by their technology moat and superior financial returns.
Read the full KLA Transcript on TIKR to see the Fab Outlook >>>
According to TIKR’s Advanced Valuation Model, the recent surge has not yet fully priced in the longevity of the AI spending cycle.
- Target Price: $1,695
- Current Price: ~$1,442
- Potential Upside: +27.3%
Valuation Model Deep Dive
The investment case for KLA is built on its status as the “toll collector” of the semiconductor industry.
The model suggests that as long as fabs are running, KLA is making money, regardless of which chip designer wins the AI race.
- The Fair Value Gap: At $1,442, the stock trades at a discount to the $1,695 target, implying 27% upside as earnings catch up to the multiple.
- The Growth Reality: The model forecasts a solid 15.9% Revenue CAGR (historical 5-year), a pace that is accelerating due to the AI infrastructure buildout.
- The Profitability Check: With Net Income Margins of 33.0%, KLA is a cash flow machine, allowing it to fund R&D and return capital to shareholders simultaneously.
If KLA can maintain its dominance in process control, the path to $1,695 looks fundamentally supported by the industry’s capex plans.
Conclusion: The quality king of the chip sector. With a 27.3% upside potential to $1,695, KLA Corporation offers a lower-risk way to participate in the AI boom, backed by a wide moat and elite profitability.
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How Much Upside Does KLA Corporation Stock Have From Here?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
