Onto Innovation Inc. ONTO is benefiting from strong demand for AI compute, which is driving momentum across both front-end semiconductor manufacturing and advanced packaging. During the first quarter of 2026, the company delivered revenue above its original guidance and expects this momentum to continue with a stronger second-quarter outlook. Management expects growth to continue through the second half of the year, supported by customer capacity expansions, increasing adoption of new products and a growing backlog. This demand is being fueled by the need for high-performance computing and enabling technologies such as silicon photonics.
The company continues to expand its process control capabilities through its broad portfolio of optical metrology solutions. Onto Innovation recently announced a collaboration with Rigaku to combine optical and X-ray technologies through its Ai Diffract software. The company stated that this combination addresses process metrology challenges involving advanced materials and complex 3D structures. The partnership has already resulted in competitive wins and additional customer evaluations across memory and logic manufacturers, while also creating opportunities for software licensing and future hybrid metrology solutions.
Growing AI semiconductor demand is also supporting Onto Innovation’s advanced packaging business. The company announced the qualification of its Dragonfly G5 inspection system at a leading 2.5D logic customer following earlier wins in high-bandwidth memory applications. Dragonfly G5 offers improved sensitivity, higher throughput and multiple sensor capabilities, and shipments are ahead of schedule. The company is actively working with additional customers across more than 15 applications and over 10 customers. At the same time, shrinking interconnect dimensions have increased demand for the company's 3DI technology, leading to additional customer orders.
Onto Innovation also highlighted that AI-driven packaging capacity constraints are encouraging the adoption of panel-level packaging, where its JetStep platform has secured qualifications with packaging suppliers. Based on these factors, the company expects advanced packaging revenue to grow more than 50% in 2026 while its advanced nodes business is projected to increase approximately 25%, supported by continued demand across logic, DRAM and an early recovery in NAND.
The company anticipates second-quarter revenues of $320–$330 million, implying about 10% rise from prior estimates at the midpoint and 28% year-over-year growth. Momentum is set to build in the second half, with at least 15% growth over the first half, putting full-year 2026 revenue above $1.3 billion.
Taking a Look at ONTO’s Competitors
Applied Materials AMAT is benefiting from AI-driven demand that is shifting wafer fabrication equipment spending toward leading-edge foundry-logic, DRAM and advanced packaging, where it holds leading process positions. In the second quarter of fiscal 2026, the company delivered record revenue and the highest gross margin in more than two decades, and management sees better multi-quarter visibility as customers share longer-range forecasts. New gate-all-around and packaging products, expanding EPIC collaborations and a growing services attach rate support value-based pricing and operating leverage. For the third quarter of fiscal 2026, Applied Materials expects total revenues of $8.95 billion plus or minus $500 million. Within that outlook, Semiconductor Systems revenues are projected at about $6.90 billion, Applied Global Services at about $1.75 billion and Other at about $300 million.
KLA Corporation KLAC continues to benefit from AI-driven spending in leading-edge foundry/logic, high-bandwidth memory and advanced packaging, supporting market share gains in process control and steady services growth that helps anchor cash generation. Management expects its advanced packaging portfolio revenue to rise to about $1 billion in 2026 and sees wafer equipment demand strengthening into 2027, with June quarter guidance implying another step up in revenue. For the fourth quarter of fiscal 2026, KLA expects revenues of $3.575 billion plus or minus $200 million. KLA expects foundry/logic to represent approximately 82% of Semiconductor Process Control systems revenue to semiconductor customers in the June quarter, with memory at about 18%, reflecting a mix shift that could influence both revenue composition and near-term margin dynamics.
ONTO Price Performance, Valuation and Estimates
ONTO’s shares have soared 22.9% in the past three months, outperforming the Zacks Nanotechnology industry’s growth of 19.9% and surpassing the Zacks Computer and Technology sector and the S&P 500 composite’s growth of 14.2% and 9%, respectively.
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In terms of forward price/earnings, ONTO’s shares are trading at 37.14X, higher than the industry’s 7.19X.
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The Zacks Consensus Estimate for ONTO has moved up for both 2026 and 2027 over the past 60 days.
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Onto Innovation currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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