KLA-Tencor (KLAC) Stock Forecast & Price Target

KLA's position as a leading manufacturer in the semiconductor wafer fabrication equipment market is bolstered by its substantial majority share in the semiconductor process control segment, which drives consistent demand from major customers like TSMC and Samsung. The company's revenue projections indicate strong growth, with overall revenue estimates for CY26 and CY27 increasing to $13.6 billion and $15.2 billion, respectively, and an expected 20% growth in the advanced packaging market, valued at $11 billion. Additionally, the anticipated strengthening of the foundry segment to 75% of sales, alongside a significant rise in packaging revenue to $925 million—reflecting a 70% year-over-year increase—contributes to a positive financial outlook for KLA.

The outlook for KLA's stock appears negative due to anticipated challenges in the Chinese market, with projections indicating a potential 10-20% decline in revenue from China next year, particularly with the expected impact of the recent BIS 50% rule, which could reduce revenues by $300 million from C4Q25 to C4Q26. Additionally, KLA's market share in the semiconductor process control segment is projected to decrease to 6-7% by 2026, driven by a less favorable WFE market mix and a significant decrease in the overall WFE market forecast for 2025 and 2026. The company's gross margin is also expected to decline to around 62.0%, reflecting a modestly lower revenue mix and ongoing challenges in maintaining sales volumes.