KLA Shares Rise as Chip-Tool Maker Beats Estimates, Lifts Outlook
KLA posted $4.14 billion in quarterly revenue, up 29% from a year earlier, and guided above Wall Street forecasts on strong demand for chipmaking tools.
Shares of KLA Corp., one of the world’s largest makers of equipment used to inspect and measure semiconductors during production, rose on Thursday after the company reported quarterly results and a holiday-quarter forecast that both came in ahead of Wall Street expectations. The stock gained about 2.6% in premarket trading on Oct. 29, according to Seeking Alpha, after rising roughly 3% in extended trading the previous evening, Investing.com reported.
What happened
KLA, based in Milpitas, California, said in a statement filed with the U.S. Securities and Exchange Commission on Oct. 28 that revenue for its fiscal first quarter, which ended Sept. 30, 2026, reached $4.14 billion. That was above the $4.0 billion midpoint of the range the company had given three months earlier and higher than the $4.04 billion analysts had projected, according to Investing.com. Revenue was up 29% from $3.21 billion a year earlier and rose from $3.66 billion in the June quarter.
Net income under generally accepted accounting principles (GAAP) was $1.55 billion, or $1.18 per diluted share. Excluding certain items, KLA earned $1.22 per share, compared with a consensus estimate of $1.18 cited by Investing.com. The per-share figures reflect a ten-for-one stock split that took effect on June 11, 2026, and the company has restated earlier periods on the same basis.
Rick Wallace, KLA’s president and chief executive, said in the release that the September quarter “beat the midpoint of guidance across all key metrics.”
A stronger outlook
The forecast for the current quarter, which runs through December, drew as much attention as the results. KLA said it expects revenue of $4.7 billion, plus or minus $200 million, well above the roughly $4.49 billion analysts had expected, according to Investing.com. It projected adjusted earnings of $1.44 a share, plus or minus 11 cents, against a consensus of $1.36, and GAAP earnings of $1.41 a share within the same range.
The company also raised its estimate for the overall wafer fab equipment market, the industry’s term for spending on the machines used inside chip factories. According to Seeking Alpha’s summary of the outlook and analyst reaction, KLA now sees that market reaching the mid-$150 billion range in calendar 2026 and topping $200 billion in 2027, driven by new factory construction and shifts to more advanced manufacturing technology.
Analysts highlighted several themes, Seeking Alpha reported:
- A growing order backlog, with visibility into 2027 and some early orders already scheduled for 2028.
- Demand tied to leading-edge chip production, new “greenfield” factories, memory chips including high-bandwidth memory (HBM) used in artificial intelligence systems, and advanced packaging.
- Expectations for wider profit margins as revenue grows faster than costs.
- Possible constraints, including limited clean-room space at chip plants and delivery schedules for tools made by other equipment suppliers.
Why it matters
KLA sells process-control systems that find microscopic defects on silicon wafers so manufacturers can raise their production yields. Reuters has reported that the rising complexity of AI chips has increased the need for that kind of inspection, making the company one of the more direct beneficiaries of the industry’s spending boom.
The upbeat reaction stands in contrast to earlier in the year. In April, Reuters reported that KLA shares fell nearly 9% in after-hours trading even though its forecast topped estimates, as some investors had hoped for more. Brooks Idlet, an analyst at research firm CFRA, told Reuters at the time that “investors are selling off anything less than massive beats in this environment.” A similar pattern followed KLA’s July report, according to Reuters.
This time, the company’s outlook cleared expectations by a wider margin. The move came on a difficult morning for many technology stocks, which were under pressure after results from Google parent Alphabet disappointed investors.
Cash returns and what comes next
KLA returned $1.24 billion to shareholders during the quarter, including $936 million in share repurchases and $305 million in dividends, the company said. Over the past 12 months, it has returned $3.79 billion. Operating cash flow for the quarter was $1.53 billion and free cash flow was $1.34 billion, according to Investing.com.
Investors will now watch whether chipmakers follow through on the factory expansions underpinning KLA’s forecast, and how rivals in the equipment sector, such as Lam Research and the Dutch company ASML, describe demand in the months ahead.
