Cohu Stock Surges 195.5% in 2026, but Valuation Now Leaves Little Room for Error

KLA Corporation is benefiting from accelerating artificial intelligence infrastructure spending, which is driving higher investments in leading-edge foundry and logic technologies and boosting demand for its process-control solutions. In fiscal 2026, the Semiconductor Process Control segment's revenues increased 12% year over year, and overall fiscal 2026 revenues rose 12% year over year to $13.58 billion. During the fourth quarter of fiscal 2026, management raised its calendar 2026 wafer-fabrication equipment market estimate, including advanced packaging, to the low-$150 billion range, up from its previous $140 billion-plus view and approximately $120 billion in calendar 2025. KLAC expects second-half 2026 revenues to be approximately 20% higher than the first half, aided by high-performance computing, high-bandwidth memory, increasing extreme ultraviolet adoption in DRAM and advanced packaging technologies such as hybrid bonding, and said backlog was expected to reach about $12.5 billion. The company faces intensifying competition from Applied Materials, which expects its process diagnostics and control business to grow more than 50% in calendar 2026, and from ASML, which expects advanced foundry and logic revenues to rise about 25% in 2026 and extreme ultraviolet revenues to increase roughly 45%.

Camtek, the dominant player in advanced packaging inspection and metrology with about 60% market share, is positioning itself for strong growth as AI chip demand expands. In its most recent quarter, roughly 80% of orders were for advanced packaging inspection, driven by memory chip manufacturers transitioning to HBM4 chips and expanding production amid the memory shortage. Camtek's Q2 revenue rose 8% year over year to a record $133 million, and third-quarter revenue is expected to rise about 20% sequentially to around $159 million, with second-half revenue projected to grow 25% over the first half. CEO Rafi Amit said on the Q2 earnings call that the company's leading position in advanced packaging is expected to drive approximately 45% growth in that business in the second half of 2026 compared with the first half. The broader advanced packaging inspection industry is expected to grow at a compound annual rate of 11% over the next five years to $6.2 billion, up from $3.7 billion in 2026, and most orders coming in now will be executed in 2027. Camtek stock is up 25% year to date and 52% over the past 12 months, though it has fallen about 35% from its May peak, leaving its trailing P/E around 184 and its forward P/E at 27, with analysts holding a median price target of $190 per share.

Camtek is heading into its upcoming earnings report with analysts projecting earnings per share of US$0.98, up from the same quarter last year, after the stock closed its most recent session at US$138.59. The company has guided for Q3 2026 revenue of US$158 million to US$160 million, implying about 20 percent sequential growth, supported by large Hawk and Eagle G5 orders tied to AI and HBM applications. Camtek's narrative projects US$821.7 million in revenue and US$367.0 million in earnings by 2029, requiring 18.1 percent yearly revenue growth and roughly a US$319 million earnings increase from US$48.1 million today, with a fair value estimate of US$187.25, a 35 percent upside to the current price. The most cautious analysts assume revenue of about US$762 million and earnings near US$375 million by 2029, underscoring how sharply expectations can differ. The core risk remains that demand from a concentrated set of HPC and Asia based customers could prove more volatile than expected.