KLA Corporation KLAC is seeing strong momentum in the advanced packaging business, supported by rising artificial intelligence (AI) infrastructure investments and growing semiconductor complexity. Management now expects advanced packaging revenues from the semiconductor process control portfolio to increase to nearly $1 billion in 2026 from around $635 million in 2025, reflecting stronger-than-expected customer demand.
The company highlighted that advanced wafer-level packaging revenues grew nearly 70% year over year in 2025, helped by higher adoption of KLA’s packaging solutions. KLA also secured the top position in process control for advanced wafer-level packaging during 2025, supported by market share gains and broader customer engagement.
Demand remains strong across CoWoS and emerging SoIC packaging technologies, particularly as AI-driven workloads increase the need for high-bandwidth memory and advanced chip architectures. Management noted that packaging customers are increasingly shifting toward more advanced inspection and metrology tools to support hybrid bonding and nanometer-level precision requirements.
The company also stated that advanced packaging demand accelerated over the last 90 days, with additional capacity requirements emerging from multiple customers. Management expects much of this growth to be weighted toward the second half of 2026.
Apart from higher industry spending, KLA continues to benefit from rising process control intensity as chip designs become more complex. The company believes advanced packaging is becoming one of the fastest-growing opportunities within the semiconductor equipment market, creating favorable conditions for long-term growth.
With strong market positioning, expanding customer adoption and improving demand visibility, KLA appears well-positioned to support its $1 billion advanced packaging revenue target.
KLA’s Competitive Landscape
KLA shares competitive space with Advanced Energy Industries, Inc. AEIS and MKS Inc. MKSI in the semiconductor and AI-driven chip manufacturing market.
Advanced Energy is benefiting from strong demand tied to AI infrastructure, data center investments and semiconductor capacity expansion. The company continues to gain traction from its eVoS, eVerest and NavX technologies, which support leading-edge semiconductor manufacturing through higher throughput and yield improvements. Advanced Energy is also expanding its manufacturing footprint and capacity to boost rising demand across semiconductor and data center markets.
Meanwhile, MKS benefits from broad exposure to semiconductor and electronics packaging markets. The company is seeing strong momentum in DRAM, logic and foundry applications, supported by rising investments in AI infrastructure and high-bandwidth memory. MKS is also gaining from growing packaging complexity as AI applications increase demand for advanced PCB, chemistry and packaging solutions.
KLA operates differently within the semiconductor value chain, focusing primarily on process control, inspection and metrology solutions. Rising advanced packaging demand, increasing chip complexity and higher process control intensity continue to support KLA’s positioning in leading-edge semiconductor manufacturing.
Overall, KLA benefits from growing demand for process control solutions, Advanced Energy gains from rising adoption of power technologies in semiconductor and AI infrastructure markets, while MKS leverages broad semiconductor and advanced packaging exposure, creating distinct positioning across the semiconductor ecosystem.
KLAC Share Price Performance, Valuation and Estimates
KLA shares have appreciated 44.8% in the trailing six months, outperforming the Zacks Computer & Technology sector’s rise of 13.5% and the Zacks Electronics - Miscellaneous Products industry’s surge of 30.5%.
KLAC Stock Performance
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KLA shares are currently trading at a premium, with a forward 12-month price-to-earnings (P/E) ratio of 37.32, as shown in the chart below.
KLAC Valuation
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For fiscal 2026, the Zacks Consensus Estimate for earnings is pegged at $37.06 per share, up 1.2% over the past 30 days. The figure implies a year-over-year increase of 11.4%.
Image Source: Zacks Investment Research
KLA currently carries a Zacks Rank #2 (Buy). 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).