Advanced Energy Industries AEIS and KLA KLAC both serve the semiconductor manufacturing equipment market. AEIS specializes in precision power solutions for semiconductor equipment, while KLA provides advanced process control and inspection solutions that help manufacturers produce increasingly complex semiconductors for AI data centers and applications. Both companies benefit from growing demand for increasingly complex semiconductors used in AI data centers and other advanced computing applications.
So, AEIS or KLAC — Which of these semiconductor stocks has the greater upside potential? Let’s find out.
The Case For AEIS Stock
Advanced Energy is benefiting from robust demand for semiconductor equipment, driven by increasing investments in leading-edge memory and logic technologies. Rising etch and deposition intensity, coupled with growing complexity in advanced semiconductor manufacturing, is boosting demand for the company’s precision power solutions. In the second quarter of 2026, semiconductor revenues jumped 33% year over year to a record $278 million.
The company’s next-generation eVerest and eVoS plasma power platforms are gaining traction, delivering improved yield and throughput for advanced manufacturing processes. Design wins in semiconductor testing, atomic layer deposition, and thermal sensing further strengthen its competitive position. The company expects semiconductor revenues to grow nearly 50% year over year in the second half of 2026, and believes new product adoption can support market share gains into 2027 and beyond.
AEIS’s strong semiconductor revenue growth, expanding product portfolio, and improving manufacturing capabilities are expected to boost top-line growth. For the third quarter of 2026, Advanced Energy expects revenues of $640 million, plus or minus $20 million.
The Case for KLAC Stock
KLA is benefiting from strong semiconductor demand, driven by accelerating investments in artificial intelligence (AI) infrastructure, leading-edge foundry/logic, memory, and advanced packaging. In the fourth quarter of fiscal 2026, revenues reached a record $3.66 billion, increasing 15% year over year and 7% sequentially. Management attributed the performance to rising AI infrastructure investments and greater process-control intensity across memory and advanced packaging.
Advanced packaging provides another significant growth opportunity. KLA now expects advanced packaging process-control systems revenues to reach approximately $1.1 billion in calendar 2026, representing growth of more than 70% year over year and exceeding its previous expectation of high-50% growth. Meanwhile, Specialty Process, PCB and Component Inspection businesses are expected to grow more than 25% in calendar year 2026, supported by high-performance computing and greater package complexity.
The broader semiconductor equipment environment also remains favorable. KLA raised its calendar year 2026 wafer fabrication equipment market estimate, including advanced packaging, to the low-$150-billion range from its previous expectation of more than $140 billion. Broad-based investment across leading-edge logic, foundry, DRAM, HBM, NAND and advanced packaging is expected to sustain capacity expansion. KLA expects second-half 2026 revenues to increase roughly 20% from the first half.
Price Performance and Valuation of AEIS and KLAC
In the year-to-date period, shares of AEIS and KLAC have rallied 3.5% and 19.8%, respectively. The outperformance in KLAC can be attributed to strong semiconductor demand, driven by accelerating investments in artificial intelligence (AI) infrastructure, leading-edge foundry/logic, memory, and advanced packaging.
Despite AEIS expanding its portfolio, the company faces customer concentration, inventory and capex execution risks, tariffs, currency swings and convertible debt complexity.
AEIS and KLAC Performance
Image Source: Zacks Investment Research
Valuation-wise, AEIS and KLA shares are currently overvalued, as suggested by a Value Score of D.
On a forward 12-month price-to-sales basis, AEIS shares trade at 2.99X, lower than KLA’s 10.02X.
AEIS and KLAC Valuation
Image Source: Zacks Investment Research
How Do Earnings Estimates Compare for AEIS & KLAC?
The Zacks Consensus Estimate for AEIS’s 2026 earnings is pegged at $3.06 per share, which has been unchanged over the past 30 days. This indicates a 75.86% increase year over year.
Advanced Energy Industries, Inc. Price and Consensus
Advanced Energy Industries, Inc. price-consensus-chart | Advanced Energy Industries, Inc. Quote
The Zacks Consensus Estimate for KLAC’s fiscal 2027 earnings is pegged at $5.44 per share, up by a couple of pennies over the past 30 days. This indicates a 44.68% increase year over year.
KLA Corporation Price and Consensus
KLA Corporation price-consensus-chart | KLA Corporation Quote
Conclusion
While both AEIS and KLAC are well-positioned to benefit from rising semiconductor and AI infrastructure investments, KLAC appears better positioned for long-term growth, supported by its leadership in process control, expanding advanced packaging opportunities, and stronger stock performance.
However, AEIS faces headwinds from customer concentration, tariff uncertainty, currency fluctuations, and execution risks tied to manufacturing expansion, which could weigh on its growth prospects.
Currently, KLA carries a Zacks Rank #2 (Buy), making the stock a stronger pick than AEIS, which has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).