KLA Stock Price Increases 15% YTD: How Should You Play It Now?

Core Viewpoint - KLA Corporation (KLAC) has shown strong stock performance, gaining 15.4% year to date, significantly outperforming the broader Zacks Computer and Technology sector and its industry peers [1][2]. Group 1: Stock Performance - KLAC's shares have outperformed the Zacks Computer and Technology sector, which has declined by 7.9%, and the Electronics - Miscellaneous Products industry, which has slipped by 0.7% [1]. - Year to date, Garmin shares have returned 1.9%, while Flex and Rockwell Automation have declined by 5.2% and 9.5%, respectively [1]. Group 2: Growth Drivers - The momentum in KLAC shares is driven by robust growth in AI and high-performance computing (HPC), alongside strength in advanced packaging and a resilient services segment [2]. - KLAC's differentiated portfolio is designed to address the complexities in semiconductor manufacturing, positioning the company to capitalize on rising semiconductor demand [3]. Group 3: Advanced Packaging Solutions - KLAC's advanced packaging revenues grew to approximately $500 million in calendar year 2024 and are projected to exceed$800 million in calendar 2025, reflecting strong demand [4]. - Advanced inspection and metrology systems are critical for ensuring high-quality semiconductor production by detecting defects at the nanometer scale [5]. Group 4: Financial Estimates - The Zacks Consensus Estimate for third-quarter fiscal 2025 revenues is $3.01 billion, indicating a 27.4$11.91 billion, indicating year-over-year growth of 21.35% [6]. - The consensus mark for fiscal 2025 earnings is $31.59 per share, implying a 33.07$500 million and a 20% decline in China-related sales [8]. - The company anticipates its effective tax rate to rise to 14% in the second half of 2025 due to global tax policy changes, which may pressure net income and overall profitability [9].