How much a stock's price changes over time is a significant driver for most investors. Not only can price performance impact your portfolio, but it can help you compare investment results across sectors and industries as well.
Another factor that can influence investors is FOMO, or the fear of missing out, especially with tech giants and popular consumer-facing stocks.
What if you'd invested in KLA (KLAC) ten years ago? It may not have been easy to hold on to KLAC for all that time, but if you did, how much would your investment be worth today?
KLA's Business In-Depth
With that in mind, let's take a look at KLA's main business drivers.
San Jose, CA-based KLA Corporation is an original equipment manufacturer (OEM) of process diagnostics and control (PDC) equipment and yield management solutions required for the fabrication of semiconductor integrated circuits (ICs) or chips. The company has a comprehensive portfolio of products addressing each major PDC subsegment—photomask (reticle) inspection, wafer inspection/defect review and metrology.
Reticle production is vital to the semiconductor device formation process. Reticles are used to control the precise deposition of materials onto the wafer, which ultimately change its chemical characteristics, imparting specific functionalities to the ICs thus created. Inspection and metrology tools measure the quality of the reticles, helping to improve reticle production yields. As a result of the broader applicability of semiconductors, shrinking form factors and increasing functionalities of individual chips, reticle design and production are growing in importance. Intel and Taiwan Semiconductor were the largest customers in the last three years, accounting for more than 10% of total sales in each year.
KLA reported revenues of $9.81 billion in fiscal 2024. Product revenues accounted for 76.2% while the rest came from Service segment.
KLA’s two main product lines are defect inspection and metrology. The company’s defect inspection tools have very broad application in chip, wafer, reticle, storage, compound semiconductor and MEMS manufacturing. Metrology tools are used to gather critical dimension measurements of the wafer and process dimensions such as film thickness, lithography overlay and surface profiling. The company’s metrology products are used in chip, wafer, reticle and solar device manufacturing. KLA also offers other products and services.
In addition to new tools, KLA also offers a comprehensive portfolio of refurbished tools that upgrade and improve yields of existing equipment under the KT-Certified program. Refurbished tools are currently sold to IC, reticle, substrate, MEMS and data storage manufacturers.
Although KLA is a major player in each of its served markets, it faces competition from other large equipment suppliers such as Applied Materials and Hitachi High-Technologies Corporation.
Bottom Line
Putting together a successful investment portfolio takes a combination of research, patience, and a little bit of risk. For KLA, if you bought shares a decade ago, you're likely feeling really good about your investment today.
According to our calculations, a $1000 investment made in May 2015 would be worth $13,563.61, or a gain of 1,256.36%, as of May 15, 2025, and this return excludes dividends but includes price increases.
The S&P 500 rose 177.81% and the price of gold increased 150.18% over the same time frame in comparison.
Analysts are anticipating more upside for KLAC.
KLAC benefits from strong demand in leading-edge logic, high-bandwidth memory, and advanced packaging, which are driving growth in the semiconductor industry. Advanced packaging is expected to exceed $800 million in 2025. Its robust portfolio and its leadership in process control systems are enabling customers to manage increasing design complexity. The services business also continues to perform well. KLAC is well-positioned to capitalize on AI advancements, with AI driving demand for higher-value wafer processing and more complex designs. However, it faces headwinds from U.S. export controls on China, which could impact revenues by approximately $500 million in 2025.Geopolitical uncertainties and supply chain disruptions, particularly in regions like China and Taiwan could pose challenges.
Shares have gained 25.35% over the past four weeks and there have been 10 higher earnings estimate revisions for fiscal 2025 compared to none lower. The consensus estimate has moved up as well.
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KLA Corporation (KLAC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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