KLA-Tencor (KLAC) Stock Forecast & Price Target

KLA's strong position in the semiconductor process control market, where it maintains a majority share, underpins a positive outlook, particularly as foundry sales are projected to constitute 75% of revenue, thereby enhancing its market dominance. The company anticipates China will account for approximately 30% of its total revenue by the end of calendar year 2025, further emphasizing its significant international growth opportunities. Additionally, KLA's strategic focus on the advanced packaging market, with an increased revenue forecast of $925 million—70% of which relates to process control—signals robust growth potential driven by heightened demand for inspection technologies.

The financial outlook for KLA appears negative due to anticipated stagnation in revenue, with projections indicating flat performance for the September and December quarters at the mid-point of guidance. Additionally, gross margins are expected to decline to approximately 62.0%, primarily attributed to a lower system revenue mix and ongoing tariff headwinds, which may impact profitability. Furthermore, delays in customer technology roadmaps, particularly from key clients like TSMC and Samsung, could lead to reduced order volumes, heightening concern over KLA's ability to sustain growth in the demanding semiconductor market.