Goldman Sachs Begins Coverage of KLA (KLAC) Stock, Gives Neutral Rating

KLA Corporation (NASDAQ:KLAC) is one of the Most Promising AI Stocks to Buy Now. Goldman Sachs analyst James Schneider initiated coverage of the company’s stock with a “Neutral” rating and a price objective of $980. The firm initiated on the US semiconductor capital equipment, storage, and foundry sectors and has a balanced view. While the firm expects more downside than upside risks, it sees stable revenue through 2026. The strong growth of AI technologies continues to fuel unprecedented demand for advanced semiconductors. Furthermore, this trend is favorable for KLA Corporation (NASDAQ:KLAC), with AI applications requiring complex and precise semiconductor manufacturing processes.

Notably, the company’s process control and yield management solutions remain important for producing the high-performance chips required for AI systems. Moving forward, with AI penetrating numerous industries, spanning data centers to edge computing devices, the demand for KLA Corporation (NASDAQ:KLAC)’s advanced tools is expected to grow, leading to expanded market opportunities, higher revenue, and increased profit margins.

Parnassus Investments, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:

“We also added several new positions, including two in Information Technology: Workday, a category leader for enterprise cloud applications for finance and human resources, and KLA Corporation (NASDAQ:KLAC), a leader in semiconductor process control. KLA, a leader in semiconductor process control, benefits from inherently high switching costs, structurally higher demand for advanced semiconductors and increasingly complex semiconductor manufacturing. The company has a strong management team that is positioning it well for long-term growth. Concerns about weaker demand in China have impacted KLA’s stock price recently, but we believe the secular growth in other regions could offset the risk in the longer term.”

While we acknowledge the potential of KLAC as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.