KLA tops first quarter results on AI driven demand, stock jumps

KLA's latest quarterly report comes after a stretch of sharp swings in its share price. The stock had fallen 14.81% over the prior 30 days and 8.42% over 90 days, even as it remained up 31.37% year to date. The earnings beat and AI-driven guidance interrupted that pullback, producing a 5.45% one-day gain and a 13.26% seven-day return.

The report ties KLA's outlook to rising AI infrastructure and high bandwidth memory investment, which is lifting wafer equipment demand. KLA's backlog of around US$12.5b with lead times extending into 2027 and 2028 underpins multi-year visibility. Services and the Specialty Process, PCB and Component Inspection businesses are expected to grow at double-digit rates in 2026, including a projected increase of more than 25% in Orbotech-derived businesses.

Still, the body flags tariffs and higher DRAM costs as pressures on margins, and any slowdown or restrictions in China spending could challenge the view that KLA is 28% undervalued. On market multiples, KLA trades at a P/E of 41.6x, above its fair ratio of 39.8x and peer average of 37.8x, though below the broader US Semiconductor group at 45.2x.