KLA Corporation

KLA Corporation shares have fallen 14.2% over the past month to $183.99, even as management raised its advanced-packaging revenue guidance by more than 70% to roughly $1.1 billion and lifted its calendar 2026 wafer-equipment market outlook to the low $150 billion range. Fiscal Q4 revenue reached $3.66 billion, up 15.21% year over year, with non-GAAP EPS of $1.05 beating expectations for the fifth consecutive quarter. The pullback stems from renewed anxiety over U.S. export controls on China and a broad rotation out of semiconductor capital equipment names, not from any deterioration in the business. CEO Rick Wallace sold 87,568 shares at $198.95 in August, and free cash flow slipped 23.24% year over year to $817 million. The stock trades at a 34 forward P/E, well below its 52-week high of $307.03, with a consensus analyst target of $231.78 and zero sell ratings among 29 covering analysts.

Samsung Electronics and SK Hynix are evaluating chipmaking equipment from China's Advanced Micro-Fabrication Equipment (AMEC) for possible use at their Chinese factories, three people familiar with the matter said, as the South Korean firms hedge against the risk of tighter U.S. export controls. The memory chipmakers began testing AMEC etching equipment about two years ago, when uncertainty was mounting over whether Washington would continue allowing them to import U.S. chipmaking tools into China. Washington revoked the VEU authorization in 2025 and later granted an annual license to the chipmakers to bring in chip manufacturing equipment to their facilities in China for 2026. Even so, both companies remain wary that future restrictions could extend beyond new equipment to the servicing, repair or replacement of Western tools already installed at their Chinese plants, the sources said. For AMEC, winning approval from Samsung or SK Hynix would amount to a powerful commercial endorsement, though any breakthrough would still face hurdles including lengthy qualification processes and potential political pressure from Washington.

US stocks closed sharply lower on Wednesday night, with the Dow Jones Industrial Average falling 1,153.18 points, or 2.19%, to end at 51,594.14. The Federal Reserve voted to keep its policy rate at 3.50 to 3.75 percent, but three of the 12 voting members supported a quarter-point rate hike, highlighting divisions within the committee. Meanwhile, Fed Chair Kevin Warsh gave no clear signal on the policy path for the next meeting. The yield on the 10-year Treasury note surged to 4.68 percent, and the 30-year yield breached 5.20 percent for the first time since mid-2007. AI-related chip stocks extended their sell-off, with Nvidia down 3.6 percent, KLA Corp. tumbling 10.8 percent, and Vertiv plunging 17 percent after revenue missed expectations. The S&P 500 closed at 7,316.15, down 1.52 percent, and the Nasdaq Composite ended at 24,442.94, down 1.74 percent.

U.S. stocks tumbled Wednesday, with the Dow Jones Industrial Average falling about 900 points, or 1.6%, as rising oil prices and renewed Middle East tensions weighed on investor sentiment ahead of the Federal Reserve's policy decision. The S&P 500 lost 1.1% and the Nasdaq Composite declined 1.3%. West Texas Intermediate crude rose about 6.9% to $89.88 a barrel after President Donald Trump said the U.S. would respond forcefully to attacks linked to Iran. Chipmakers extended recent losses, with the iShares Semiconductor ETF sliding more than 4%, while Micron Technology and Advanced Micro Devices each fell more than 5% and KLA dropped over 8%. Markets also remained focused on the Federal Reserve's policy announcement later Wednesday, with traders largely expecting policymakers to leave interest rates unchanged in a target range of 3.5% to 3.75% and attention turning to Chair Kevin Warsh's comments for clues on the rate outlook.

U.S. stocks fell sharply, with the S&P 500 sliding to a one-month low and the Nasdaq 100 sinking to a three-month low, as chipmakers and AI infrastructure stocks sold off and crude oil prices surged more than 7%. The Philadelphia Semiconductor Index dropped over 3% to a two-and-a-half-month low, with Nebius Group down more than 9%, KLA Corp and Sandisk down more than 7%, and Applied Materials, NXP Semiconductors, and ARM Holdings down more than 5%. Crude oil jumped after the Islamic Revolutionary Guard Corps said it targeted a U.S. airbase in Jordan with ballistic missiles and claimed to have halted three tankers in the Strait of Hormuz, while the U.S. and Saudi Arabia launched a joint attack on Iran-aligned terrorists in Iraq. The Federal Reserve kept interest rates unchanged in a 9-3 decision, and markets awaited earnings from Microsoft and Meta Platforms after the close. The 10-year Treasury yield rose 4 basis points to 4.64%, and energy stocks gained, with Diamondback Energy up more than 4% and ConocoPhillips, APA Corp, Devon Energy, ExxonMobil, and Occidental Petroleum up more than 3%.

Several companies made notable premarket moves following their latest quarterly reports. Biogen rose 0.7% after beating revenue consensus and raising its full-year adjusted EPS guidance. GE HealthCare Technologies surged 12% on second-quarter adjusted earnings per share of $1.13, topping the FactSet consensus of $1.04, and reaffirmed its 2026 earnings guidance. Ford Motor jumped 6% after beating adjusted earnings expectations and hiking its 2026 earnings outlook, though automotive revenue slightly missed LSEG estimates. Vertiv tumbled 13% as its 17.8% organic revenue growth fell well short of the 23.6% FactSet consensus. Generac gained 5.5% on adjusted earnings of $2.91 per share, beating the $2.01 forecast, and reiterated its revenue growth guidance. Procter & Gamble dropped over 3% after fiscal fourth-quarter revenue of $21.2 billion missed the $21.38 billion LSEG estimate, and net income fell to $3.04 billion from $3.62 billion a year ago. Deutsche Bank rose more than 2% after posting a record second-quarter after-tax profit of 1.9 billion euros. CoStar tumbled 15% on a revenue miss and current-quarter guidance of $935 million to $945 million, below the $967.5 million consensus. Rocky Brands surged 16% as adjusted earnings per share more than tripled year-over-year, aided by tariff refunds and strong double-digit growth in several brands. KLA Corp slid 7% after issuing disappointing guidance, while Seagate Technology rose 6% on an outlook that trounced expectations, and Western Digital gained 4% in sympathy. Manhattan Associates climbed 11% after beating estimates and raising full-year forecasts. Visa lost 2% as its 2026 guidance underwhelmed, and it announced plans to cut about 2,600 jobs. Teradyne surged 9% on beats across second-quarter results and third-quarter forecasts. NXP Semiconductors lost 1.7% as its third-quarter adjusted earnings guidance bracketed the LSEG estimate. Skyworks Solutions slumped 9% after adjusted margin of 44.9% narrowly missed the 45.0% expectation.

Semiconductor stocks fell sharply amid a global sell-off driven by concerns over increased competition from China and doubts about the sustainability of AI-related demand. Amkor led the decline, falling nearly 24% after its third-quarter revenue guidance missed analyst expectations, while Vishay Intertechnology, FormFactor, Penguin Solutions, and Micron dropped roughly 9% to 11%. Kulicke and Soffa fell 7.8%, Applied Materials fell 7.1%, AMD fell 7.2%, Intel fell 5.3%, and KLA Corporation fell 5.1%. The rout extended to Asian peers SK Hynix and Samsung, which dropped over 13%, as reports of China's progress in advanced chip manufacturing and the strong debut of Chinese competitor ChangXin Memory Technologies fueled fears of oversupply and pricing pressure.

Several stocks made big moves in after-hours trading following their latest earnings reports. Ford Motor surged 6% after beating second-quarter adjusted earnings expectations and raising its 2026 earnings outlook, though automotive revenue slightly missed LSEG estimates. Teradyne jumped 14% as both second-quarter results and third-quarter guidance topped FactSet forecasts, while Seagate Technology rose 8% on an outlook that trounced LSEG expectations, lifting Western Digital 4% in sympathy. On the downside, KLA Corp slid 9% after issuing disappointing guidance, CoStar tumbled 12% on a revenue miss and weak current-quarter forecast, and Skyworks Solutions slumped 10% as adjusted margin narrowly missed expectations. Visa lost nearly 2% after its 2026 fiscal-year guidance underwhelmed, despite announcing plans to cut about 2,600 jobs, or roughly 7% of its headcount.

KLA Corporation shares tumbled 10% on Tuesday after the company issued guidance that fell short of expectations, even as it reported fourth-quarter results that exceeded analyst estimates. The semiconductor equipment maker posted fourth-quarter earnings per share of $1.05, beating the analyst estimate of $1.00, with revenue reaching $3.66 billion compared to the consensus estimate of $3.6 billion. For the full fiscal year ended June 30, 2026, the company reported GAAP net income of $4.83 billion and GAAP diluted earnings per share of $3.66 on total revenues of $13.58 billion. KLA sees first-quarter earnings per share of $1.06 to $1.26, compared to the consensus of $1.13, and projects fiscal 2027 revenue of $3.8 billion to $4.2 billion, versus the consensus estimate of $3.91 billion. President and CEO Rick Wallace said the June quarter results reinforce that the trends driving growth are strengthening, with momentum across the business accelerating in the second half of calendar 2026 and continuing through 2027.

Semiconductor capital equipment stocks sank on Monday after a report that a Shanghai-based, state-backed company has started mass-producing homegrown immersion DUV lithography machines for the first time. ASML erased early gains of over 2% and dragged down U.S. peers Applied Materials, Lam Research, and KLA Corp following the report by The Information. The publication noted that the company assembled DUV development teams from other Chinese firms, including state-backed startup Shanghai Yuliangsheng Technology, to achieve the milestone. The breakthrough threatens ASML’s DUV sales to China, which had become a massive revenue driver after export controls banned sales of its cutting-edge EUV machines, and raises fears that a fully indigenized Chinese chip sector could displace other U.S. equipment suppliers. The development also undermines the impending U.S. MATCH Act, which aims to block China from buying or servicing DUV machines, as domestic production could render the restrictions ineffective.

KLA Corporation is scheduled to report its fourth-quarter fiscal 2026 results on July 28. The company expects revenues of $3.575 billion, plus or minus $200 million, while the Zacks Consensus Estimate is $3.61 billion, indicating a 13.71% increase from the year-ago quarter. The consensus earnings estimate is $1 per share, reflecting 6.38% year-over-year growth. KLA's performance is likely to have benefited from strong foundry and logic spending driven by AI infrastructure, with foundry and logic expected to account for roughly 82% of semiconductor process control systems revenues. However, higher DRAM chip prices are expected to have reduced gross margin by approximately 100 basis points, and a slightly weaker product mix may have limited margin expansion. KLA shares have jumped 80% year to date, outperforming the broader Zacks Computer and Technology sector's return of 13.2%, but the stock trades at a forward 12-month price-to-earnings ratio of 42.48, above the sector average of 23.73. The company expects advanced packaging revenues to reach approximately $1 billion in calendar 2026, up from roughly $635 million in 2025, though it faces risks from elevated memory costs and geopolitical uncertainties. KLA currently carries a Zacks Rank of 3, or Hold.

Shares of memory and AI-related stocks fell again in premarket trading on Thursday after South Korean peers SK hynix and Samsung Electronics tumbled for a second day despite strong earnings and outlook from Taiwan Semiconductor Manufacturing. SK hynix plummeted about 12% on the Korea Exchange, while Samsung slumped nearly 9%, dragging the Kospi Index down about 6.37%. TSM raised its 2026 revenue growth outlook for the second time this year and announced plans to invest an additional $100 billion to expand U.S. chipmaking capacity, bringing its total investment plan to $265 billion, yet its stock fell about 4%. American memory giant Micron Technology fell nearly 3% premarket, Western Digital slumped about 5%, Seagate Technology fell nearly 4%, and Sandisk tumbled about 6%. AI chipmaker Nvidia dipped about 1%, while Advanced Micro Devices declined nearly 3%, Broadcom and Qualcomm each fell about 2%, and chip equipment makers Lam Research, Applied Materials, KLA, and ASML each fell around 2%.

KLA shares are overvalued, trading at a forward 12-month price-to-sales ratio of 17.47 times, well above the Zacks Computer and Technology sector average of 6.98 times. The stock has surged 90.5 percent year to date, driven by AI-fueled semiconductor demand, with management forecasting calendar 2026 wafer equipment spending to exceed 140 billion dollars and advanced packaging revenues to reach roughly 1 billion dollars, up from about 635 million in 2025. However, elevated DRAM prices are expected to create a 100-basis-point gross margin headwind over coming quarters, while U.S. export restrictions and competition from MKS, Lam Research, and Entegris pose additional risks. The Zacks Consensus Estimate for fiscal 2026 earnings stands at 3.71 dollars per share, unchanged over the past 30 days, and the stock carries a Zacks Rank of 3, or Hold.

Shares of FormFactor, Penguin Solutions, Western Digital, Applied Materials, and KLA Corporation fell sharply after Samsung Electronics' record quarterly profit triggered a sell-the-news reaction, compounded by a Reuters report that China's DeepSeek is developing its own AI inference chip. Samsung's preliminary second-quarter operating profit of 89.4 trillion won surged 1,810% year-over-year, with revenue up 129% to 171 trillion won, beating consensus, but memory stocks had run up significantly ahead of the report, prompting profit-taking. The DeepSeek chip news revived structural fears that custom silicon could erode Nvidia's dominance, adding to concerns already raised by OpenAI's Broadcom-built inference chip and Anthropic's early talks with Samsung on a 2-nanometer accelerator. Morgan Stanley had earlier warned clients the AI rally was nearing its end and expected more capex discipline, while risks such as SK Hynix's planned Nasdaq debut and heavy insider selling further pressured the sector. FormFactor fell 10.2%, Applied Materials dropped 9.7%, Western Digital declined 9.1%, and both Penguin Solutions and KLA Corporation lost 8.4%.