Onto Innovation Inc

KLA is benefiting from accelerating demand for advanced packaging driven by AI and high-performance computing, with the company expecting its advanced packaging process-control systems revenues to reach approximately $1.1 billion in calendar 2026, representing growth of more than 70% year over year. The company's broad portfolio, including wafer inspection and metrology systems and chemistry process-control systems, positions it to capture spending across multiple stages of advanced packaging, while HPC packaging and integration are also driving demand in its Specialty Process and PCB and Component Inspection businesses, with these combined products expected to grow more than 25% in calendar 2026. However, KLA faces tough competition from Onto Innovation and Applied Materials, with Onto raising its 2026 advanced packaging growth outlook to approximately 80% and securing more than $200 million of Dragonfly orders from a single OSAT, and Applied Materials expecting its process diagnostics and control business to grow more than 50% in 2026. KLA shares have jumped 50.9% year to date, outperforming the broader Zacks Computer and Technology sector's return of 15.4%, but the stock is overvalued with a forward 12-month price/sales of 13.05X compared with the sector's 6.32X. The Zacks Consensus Estimate for fiscal 2027 earnings is pegged at $5.43 per share, up 7.1% over the past 30 days, suggesting 44.41% growth from fiscal 2026, and KLA currently carries a Zacks Rank #2 (Buy).

Onto Innovation completed its approximately $720 million purchase of a 27% minority stake in Rigaku Holdings on August 10, 2026. The investment aims to accelerate joint development of next-generation X-ray process-control technology for semiconductor manufacturing. Management estimates the semiconductor X-ray technology market at roughly $1 billion and expects adoption to increase as 3D transistor and packaging structures become more complex. Onto ended the second quarter with $1.88 billion of cash and short-term investments, strengthened by a $1.5 billion zero-percent convertible-note offering due in 2031. The Rigaku stake will be accounted for under the fair value option, so strategic value depends on joint development, customer qualifications, and adoption rather than immediate consolidated revenue.

Onto Innovation shares surged 6% Tuesday, extending an 85% year-to-date gain, after peer Camtek reported record quarterly results and NVIDIA announced a $500 billion AI infrastructure financing partnership. Camtek posted record revenue of $133.24 million for Q2 2026, beating the $130.19 million consensus, and disclosed year-to-date bookings exceeding $600 million with deliveries stretching into 2027, driven by AI-linked HBM memory and chiplet architectures. NVIDIA is partnering with Apollo, BlackRock, and other Wall Street firms on a financing platform aimed at mobilizing more than $500 billion in third-party capital for AI infrastructure, reinforcing demand for Onto's metrology and inspection tools used in HBM stacks and 2.5D logic packages. Onto had already guided Q2 FY2026 revenue to $320 million to $330 million and expects roughly 25% full-year growth in its advanced nodes segment, with its Dragonfly G5 and Atlas G6 systems winning qualifications at key AI process nodes.

Onto Innovation reported second-quarter revenue of $343 million, up 35% year over year, with non-GAAP earnings per share of $1.93 exceeding the high end of guidance. Gross margin reached 57% and operating margin hit 30%, while advanced-node revenue rose about 50% sequentially to roughly $120 million. The company raised its full-year advanced-packaging growth outlook to approximately 80% and now expects second-half revenue growth of at least 25%, up from a prior 15% forecast, citing backlog exceeding $1.1 billion that extends into 2027. For the third quarter, Onto Innovation guided revenue of $380 million to $400 million and expects to exit 2026 with an operating margin of at least 33%.

Onto Innovation reported first-quarter fiscal 2026 revenue of $292 million, a 10% sequential gain, and per-share earnings of $1.42, beating expectations by $0.04. The semiconductor supplier offered second-quarter revenue and EPS midpoint guidance of $325 million and $1.69, respectively. Shares have surged 100% year-to-date, driven by strong institutional demand and a 35.6% estimated EPS ramp this year. The stock recently earned its first outlier inflow signal, reflecting unusual buy pressure and growing fundamentals.

KLA Corporation expects the wafer fabrication equipment market to reach approximately $215 billion, plus or minus $20 billion, by 2030, outpacing broader semiconductor industry growth. The company projects the market will hit around $140 billion in calendar 2026, driven by artificial intelligence investments across foundry, logic, and memory. KLA’s process-control market share rose to 58% in 2025, up 360 basis points since 2021, supported by leadership in optical, e-beam, and mask inspection as well as advanced packaging. The company anticipates the process-control market will grow faster than overall wafer fabrication equipment, aided by advanced packaging, services growth of 13-15% annually, and more than 150 basis points of additional share gains over time. Competitors Onto Innovation and Nova also expect to outgrow the broader market, though KLA benefits from a wider franchise spanning inspection, metrology, advanced packaging, and services.

Zacks Investment Research compares Onto Innovation and KLA Corporation as investment options in the semiconductor equipment sector. KLA, the dominant process control leader, raised its advanced packaging revenue outlook to around $1 billion in 2026 and introduced a 2030 financial model targeting 13 to 17 percent revenue CAGR. Onto Innovation, a fast-growing specialist, expects over 30 percent revenue growth in 2026, driven by AI-related packaging demand and a more than $240 million HBM-related volume purchase agreement through 2027. Both stocks carry a Zacks Rank of 3, or Hold, with ONTO trading at a forward price-to-earnings of 39.61 times versus KLAC's 52.71 times. The analysis suggests KLA suits conservative investors seeking stability, while Onto Innovation offers higher growth potential with greater volatility.

Onto Innovation is capitalizing on rising advanced packaging demand by expanding its inspection and metrology portfolio, with management expecting advanced packaging revenue to grow more than 50% in 2026. The company highlighted that strong AI compute demand drove first-quarter revenue above original guidance and supports expectations for continued growth throughout 2026. A major contributor is the Dragonfly G5 inspection system, which has been qualified at a leading 2.5D logic customer and is seeing shipments run ahead of plan, with more than 15 distinct applications across over 10 customers in the pipeline. Onto Innovation also sees growing opportunities in surface charge metrology for chiplet architectures and in panel-level packaging through its JetStep and Firefly systems.