KLA Corporation

What they do

KLA provides inspection, metrology, software, and services for manufacturing wafers, reticles/masks, ICs, packaged ICs, and PCBs. It also sells advanced vacuum deposition and etching tools for specialty semiconductors. The services business accounted for about 23% of fiscal 2026 revenues.

Revenue drivers

• Semiconductor Process Control — Largest segment; inspection, metrology and software products and services for IC, wafer, reticle/mask and chemical/materials manufacturers.
• Specialty Semiconductor Process — Vacuum deposition and etching tools for MEMS, RF communication, and power semiconductor customers.
• PCB and Component Inspection — Inspection, test, and measurement equipment for PCBs, IC substrates, and packaged ICs.
• Services — Maintenance and other services to maximize uptime and tool life; about 23% of fiscal 2026 total revenues.

Recent performance

For Q4 FY2026 (ended June 30, 2026), total revenues were $3.66 billion, GAAP net income $1.36 billion, and GAAP diluted EPS $1.04. Full-year FY2026 revenues were $13.58 billion, GAAP net income $4.83 billion, diluted EPS $3.66. Quarterly operating cash flow was $906.4 million and free cash flow $817.1 million; capital returns were $876.3 million in the quarter and $3.35 billion for the year. The company effected a ten-for-one stock split on June 11, 2026, with per-share data retroactively adjusted.

Strategy

KLA focuses on enabling advanced process control for leading-edge foundry logic, memory, and advanced packaging driven by AI infrastructure expansion. Management emphasizes increasing demand for process control due to more sophisticated designs and rising complexity. The company is positioned on the 'critical path' of AI infrastructure buildout according to its CEO. Capital returns to shareholders include dividends and stock repurchases.

Risks

• Export controls on China — Evolving BIS rules may limit KLA's ability to sell products and provide services to customers in China.
• Tariffs and trade restrictions — Tariffs, retaliatory measures, and uncertainty around trade policy could increase costs or disrupt operations.
• Cybersecurity threats — Cyber incidents could disrupt operations, cause loss of information or assets, and trigger remediation costs.
• Global economic weakness — Downturns in financial markets or the global economy could reduce customer capital spending on equipment.

Outlook

Management expects momentum to accelerate in the second half of calendar 2026 and continue through 2027, driven by AI infrastructure expansion. Guidance for Q1 FY2027 (ending September 2026) includes total revenues of $4.0 billion plus or minus $200 million, GAAP diluted EPS of $1.14 plus or minus $0.10, and non-GAAP diluted EPS of $1.16 plus or minus $0.10. GAAP and non-GAAP gross margins are expected in ranges of 61.6% and 62.5%, respectively, each plus or minus 1.0%.