KLA Corporation (KLAC) | The Buildout — AI Infrastructure

The Verdict

KLA makes process-control and process-enabling equipment and services that let chipmakers measure, inspect, and manage yield across wafers, masks, and packages. Its tools sit on the critical path of AI infrastructure expansion because leading-edge logic, HBM memory, and advanced packaging each require more inspection and metrology per wafer. The business spans semiconductor process control, specialty semiconductor process, and PCB/component inspection, anchored by an installed-base service stream.

Earnings Beat

KLA reported record June-quarter revenue of $3.66B, up 7% sequentially and 15% year over year. Gross margin was 61.4% on a GAAP basis and 62.4% on a non-GAAP basis, at the upper end of guidance. Services revenue was $820M, up 17% year over year.

Management tone: Management's tone shifted from "strengthening" in January to "critical path" and "unprecedented visibility" by July. Executives gave unusually early forward commentary, including a 2027 WFE growth view; in April, management explicitly noted it would normally not comment on next-year WFE growth at that date.

Management Guidance

For the September quarter, management guided revenue of $4.0B ±$200M, non-GAAP gross margin of 62.5% ±1pp, operating expenses of about $690M, non-GAAP EPS of $1.16 ±$0.10, and GAAP EPS of $1.14 ±$0.10. For calendar 2026, management expects high-teens total revenue growth, Semiconductor Process Control systems growth over 20%, second-half revenue about 20% above the first half, gross margin of roughly 62% ±50bps, and advanced packaging process control revenue of approximately $1.1B.

Trajectory

Revenue has accelerated across the last four quarters: $3,210M, $3,297M, $3,415M, and $3,658M, with sequential growth stepping from 1.1% to 7.1%. Management attributes the second-half step-up to capacity coming online in long-lead-time supply chain areas and to the HBM memory mix rising to about 27% of Semiconductor Process Control systems revenue to semiconductor customers in the September guide. Reported gross margin held near 61% as DRAM component costs and tariffs offset some of the revenue leverage.

The Model

The model projects FY+1 revenue of $17,000M and EBITDA of $7,803M, a 45.9% EBITDA margin. FY+2 revenue is projected at $19,700M with EBITDA of $9,259M, a 47.0% margin. The near-term anchor is the guided September quarter and the second-half 2026 step-up; FY+2 incorporates further expansion as 2027 WFE growth above 2026 and advanced packaging scale convert into revenue.

Projections are the median of 5 independent model runs. The model’s revenue sits 3.8% below analyst consensus.

For the September quarter, management guided revenue of $4.0B ±$200M, non-GAAP gross margin of 62.5% ±1pp, operating expenses of about $690M, non-GAAP EPS of $1.16 ±$0.10, and GAAP EPS of $1.14 ±$0.10. For calendar 2026, management expects high-teens total revenue growth, Semiconductor Process Control systems growth over 20%, second-half revenue about 20% above the first half, gross margin of roughly 62% ±50bps, and advanced packaging process control revenue of approximately $1.1B.

What Could Go Right — and Wrong

Looking Ahead

Management's next twelve months hinge on executing the second-half 2026 ramp: the September revenue guide, gross margin of 62.5% ±1pp, and second-half revenue about 20% above the first half. Through calendar 2027, management plans for WFE growth above 2026, with customer delivery discussions already reaching the second half of 2027 and supplier capacity agreements signed out to 2029 and beyond.

Financials

Annual Summary

Key Ratios (Trailing)

The Company

KLA Corporation makes process-control and process-enabling equipment and services used across the electronics supply chain. In plain terms, when a chipmaker builds a fab and needs to know whether each wafer, mask, and package is good, KLA supplies inspection, metrology, and software tools that answer those questions. Its 10-K describes it as a supplier of industry-leading equipment and services serving wafers, reticles/masks, chemicals and materials, ICs, packaged ICs, and PCBs.

KLA is organized into three reportable segments: Semiconductor Process Control, Specialty Semiconductor Process, and PCB and Component Inspection. It is headquartered in Milpitas, California, and as of June 30, 2025 owned or leased 7.1 million square feet of space worldwide, primarily in the U.S., Germany, U.K., Singapore, Israel, and India. The 10-K does not break that footprint into named manufacturing sites.

Business Segments

Competitive Landscape

KLA's 10-K names Applied Materials, ASML, Hitachi High-Technologies, Onto Innovation, and Lasertec among its competitors. Management claims process-control share has grown 360 basis points since 2021 and is roughly 6–7x the nearest competitor, though AMAT expects advanced-packaging revenue up >50% and Nova saw advanced packaging grow >60% in 2025.

Supply Chain

KLA sits between long-lead-time component suppliers and the largest chipmakers. The 10-K discloses TSMC and Samsung as >10% customers; supplier names in the wiring layer are inferred rather than disclosed.