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KLA Sank After Earnings—Then Analysts Started Raising Targets
Reported by Leo Miller. Published: 2/3/2026.
Quick Look
- KLA is one of the lesser-discussed leaders in semiconductor equipment, but its importance is undeniable.
- The stock has nearly doubled over the past 52 weeks, but it just sold off heavily post-earnings.
- Counterintuitively, Wall Street analysts boosted their KLA price targets by more than 10% on average following the results, signaling potential in the stock.
Within the wafer fabrication equipment (WFE) landscape, several high-profile companies tend to dominate the discussion. This includes firms like ASML (NASDAQ: ASML), Lam Research (NASDAQ: LRCX), and Applied Materials (NASDAQ: AMAT).
Despite attracting less attention than some of its peers, KLA (NASDAQ: KLAC) is a key player in the WFE space and the broader semiconductor ecosystem. With a market capitalization near $185 billion, KLA is the fourth-most valuable stock in the WFE industry. Over the past 52 weeks, KLA shares have delivered a total return of nearly 93%.
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Discover how to invest in the fund Trump uses to collect this income >>That momentum hit a bump after KLA released its latest earnings report on Jan. 29. Although the company beat estimates on sales and adjusted earnings per share (EPS), the stock plunged about 15% the next day. At the same time, many Wall Street analysts raised their price targets, suggesting the sell-off may have been an overreaction and a potential buying opportunity.
Understanding KLA: Process Control Behemoth With Expanding Share
KLA is a dominant supplier in the semiconductor manufacturing process-control market. Its equipment and software help manufacturers maintain quality and efficiency. Two of the company's core offerings are inspection and metrology: inspection finds defects so manufacturers can correct process problems, and metrology measures dimensions at extremely small scales to ensure products meet precise specifications.
Both inspection and metrology are critical to maximizing yield and minimizing cost during production. KLA reported it held 54.4% of the process-control market in 2021—more than four times its nearest competitor. By the end of 2024, KLA said its share had grown by 250 basis points versus 2019. As semiconductors advance, they require more sophisticated process control, which supports KLA's confidence in further market-share gains across the WFE industry.
KLA vs LRCX: What Investors May Have Missed
In the latest quarter, KLA reported revenue of $3.3 billion, up 7.1% and slightly above expectations of $3.25 billion. Adjusted EPS was $8.85, an 8% increase that beat estimates of $8.75. Despite these beats, confusion around KLA's outlook for industry-wide WFE growth triggered the sharp sell-off. The previous day, Lam Research had reported earnings and projected the WFE industry would grow from $110 billion in 2025 to $135 billion in 2026, implying roughly 23% growth.
KLA provided comparable expectations for 2026, saying it sees the total WFE market reaching the "mid-$130 billion range." However, many headlines focused on KLA's comment that "we expect the core WFE market to grow in the high-single to low-double digits," which appears inconsistent with Lam's 23% figure at first glance.
The difference stems from definitions. KLA separates the WFE market into core WFE and advanced packaging. It forecasts advanced packaging will grow from about $11 billion to $12 billion in 2026 and included advanced packaging in its WFE total for 2025, while Lam did not. Using KLA's definition, the company expects the overall WFE market to grow from roughly $121 billion to the mid-$130 billion range—about 12% growth—consistent with its remarks. In short, KLA's forecast does not necessarily indicate weakness relative to Lam; rather, some investors appear to have misread the company's phrasing.
Analysts Significantly Boost KLA Price Targets Despite 15% Fall
Despite the steep post-earnings drop, MarketBeat tracked about 10 analysts who raised their price targets after the report. On average, those targets increased by roughly 12%, a notable contrast to the stock's 15% decline.
Among analysts who updated or issued targets after Jan. 29, the average target is about $1,712, compared with the MarketBeat consensus target of roughly $1,583. Those figures imply about 21% and 12% upside, respectively, and suggest that forecasts incorporating the latest data are considerably more bullish than older projections.
Even after the sell-off, KLA doesn't look like a bargain. The stock's forward price-to-earnings ratio near 35x is roughly 36% above its three-year average. Still, with AI-driven demand and resulting semiconductor supply constraints, the WFE industry is well positioned. As a market-share leader and a beneficiary of these trends, KLA's outlook leans toward the upside.
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