KLA Corp. (KLAC) First Take Modest upside to quarter and guidance relative to elevated expectations

Equity Research 28 July 2026 | 4:23PM EDT

KLA Corp. (KLAC): First Take: Modest upside to quarter and guidance relative to elevated expectations

Key stock takeaways: We expect the stock to trade lower following a quarter and James Schneider, Ph.D. | guidance that were consistent with Street numbers, but below elevated investor Goldman Sachs & Co. LLC expectations, per our conversations. We believe investor expectations were Anmol Makkar somewhat elevated heading into the print, with tailwinds to WFE trends and upside | in advanced node logic spending being partly offset by concerns around lower Goldman Sachs & Co. LLC

process-control intensity. We expect the following topics to be in focus on the Luya You | earnings call: (1) management’s view on process control intensity in CY26/27; (2) Goldman Sachs & Co. LLC near-term inflection in advanced packaging demand given CoWoS tightness; (3) Khalil Fenina gross margin trends. | Goldman Sachs & Co. LLC Quarterly results just above the Street: KLA reported revenue of $3.66 bn, just above GS at $3.62 bn and the Street (Visible Alpha) at $3.61 bn, while gross margin of 62.4% was just above GS at 62.1% and the Street at 61.9%. Non-GAAP EPS of $1.05 was above GS at $1.01 and the Street at $1.00. Systems revenue of $2.84bn was above GS at $2.61 bn and the Street at $2.81 bn, and Service revenue of $820 mn was above GS at $809 mn and the Street at $813 mn.

3Q revenue guidance is slightly above the Street, with EPS above. KLA guided 3Q just above the Street on revenue and EPS. Revenue was guided to $4.00 bn at the midpoint, which is slightly above GS at $3.93 bn and the Street at $3.95 bn. Gross margin was guided to 62.5%, which is just above GS at 61.9% and the Street at 62.2%. Non-GAAP EPS guidance of $1.16 at the midpoint is above GS at $1.11 and the Street at $1.13.

Read-through to our coverage: We expect a modestly negative initial reaction for AMAT (Buy) and LRCX (Buy) in our coverage.

Price target and risks: Our 12-month target price of $230 reflects a 35X P/E multiple applied to our normalized EPS of $6.50. Key upside/downside risks: (1) sharp increase in Foundry/Logic spending; (2) uncertainty related to export restrictions were to be removed; (3) sharp rebound in Memory WFE spending (vis-a-vis Foundry/Logic); (4) incremental US export restrictions.

Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to Analysts employed by non-US affiliates are not registered/qualified as research analysts with FINRA in the U.S.

Goldman Sachs KLA Corp. (KLAC)

Exhibit 1: KLA - Variance summary 2Q26 Financials ($ mn, except EPS) Actual GS Street Actual/GS Actual/Street Total Systems 2,837 2,611 2,812 8.6% 0.9% Total Service % 1.0% Total Revenue 3,658 3,620 3,610 1.0% 1.3% QoQ 7.1% 6.0% 5.7% YoY 15.2% 14.0% 13.7% Gross Margin 62.4% 62.1% 61.9% +29 bps +44 bps Operating Margin 43.4% 43.4% 43.4% +2 bps +2 bps Non-GAAP EPS $1.05 $1.01 $1.00 4.4% 4.9%

Source: Company data, Goldman Sachs Global Investment Research, Visible Alpha Consensus Data

Exhibit 2: KLA - Guidance 3Q26E Financials ($ mn, except EPS) High Low Guidance (midpoint) GS Street Guidance/GS Guidance/Street Total Revenue 4,200 3,800 4,000 3,928 3,954 1.8% 1.2% QoQ 9.4% 8.5% 8.1% YoY 24.6% 22.4% 23.2% Gross Margin 63.5% 61.5% 62.5% 61.9% 62.2% +59 bps +33 bps Non-GAAP EPS $1.26 $1.06 $1.16 $1.11 $1.13 4.8% 2.3%

Source: Company data, Goldman Sachs Global Investment Research, Visible Alpha Consensus Data

KLAC 12m Price Target: $230.00 Price: $203.36 Upside: 13.1%

Neutral GS Forecast 6/25 6/26E 6/27E 6/28E Market cap: $267.9bn Revenue ($ mn) 12,156.2 13,541.8 17,027.1 19,699.1 Enterprise value: $271.9bn EBITDA ($ mn) 5,332.8 5,920.0 7,698.7 9,084.5 3m ADTV: $2.8bn EBIT ($ mn) 5,241.0 5,821.9 7,594.2 8,973.6 United States EPS ($) Americas Semiconductors & IT P/E (X) Services EV/EBITDA (X) M&A…