KLA-Tencor (KLAC) Stock Forecast & Price Target

KLA is positioned favorably within the semiconductor wafer fabrication equipment market, with foundry sales projected to account for 75% of overall sales as DRAM and NAND segments are expected to show robust growth, contributing an additional $1-2 billion year-over-year. The company anticipates significant revenue from the advanced packaging market, now expected to surpass $925 million, reflecting a 70% year-over-year increase driven by an expanding addressable market projected to grow at approximately 20% annually. KLA's revenue estimates have been revised upward for CY26 and CY27, now forecasting $13.6 billion and $15.2 billion respectively, highlighting the company's strong growth trajectory and solid demand fundamentals.

The financial outlook for KLA exhibits concerns primarily related to declining revenues from China, which is projected to contribute only 25% of total sales by CY26, down from approximately 31% in CY25, reflecting a significant contraction. Additionally, the anticipated drop in wafer fabrication equipment (WFE) market size to below $110 billion in 2026, alongside a potential decline in KLA's market share within the process control segment, suggests a challenging competitive landscape. These factors, compounded by the expected impact from recent trade regulations, including the BIS rule which may reduce revenues by $300 million, further reinforce a negative outlook for the company's financial performance.