KLA Corporation’s third quarter was driven by robust demand in semiconductor process control, with advanced packaging and AI-related infrastructure emerging as primary contributors. Management emphasized strong execution in expanding their service portfolio and capturing share in advanced packaging, particularly as chip designs become more complex. CEO Richard Wallace pointed to “momentum in advanced packaging” and “increased complexity, shorter product cycles, and higher-value wafers” as factors accelerating customer adoption. The company’s process control solutions continued gaining relevance among leading-edge logic and memory customers, further supported by a notable rise in services revenue.

Is now the time to buy KLAC? Find out in our full research report (it’s free for active Edge members).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From KLA Corporation’s Q3 Earnings Call

• Harlan Sur (JPMorgan) asked about the improved outlook for wafer fab equipment (WFE) growth in 2026 and whether increasing customer engagement is driving higher process control intensity; CFO Bren Higgins cited broadening investment and constructive customer conversations as key factors.
• Vivek Arya (Bank of America) questioned the sequential decline in foundry/logic revenue and the impact of China restrictions; Higgins explained the drop was largely due to normalization in China and shifting business mix, with export controls having an immaterial short-term effect.
• Christopher Muse (Cantor Fitzgerald) focused on gross margin guidance and long-term incremental margins; Higgins attributed margin changes to product mix and reiterated the company’s 40–50% incremental margin target over time.
• Timothy Arcuri (UBS) inquired about the cessation of RPO (remaining performance obligations) disclosures and the impact on China revenue mix; Higgins said lead times have normalized and China is expected to settle at a lower mix in 2026.
• Yu Shi (Needham) asked about the strong growth in DRAM process control revenue and the role of EUV (extreme ultraviolet) lithography; CEO Richard Wallace and Higgins highlighted higher sensitivity requirements and the resurgence of DRAM as a key inspection market.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will monitor (1) continued momentum and share gains in advanced packaging, (2) the pace of AI and high-bandwidth memory-related investments by semiconductor manufacturers, and (3) the impact of export controls and the normalization of China demand on KLA’s revenue mix. Progress in expanding service offerings and capturing new customers in advanced logic and memory will also be important signposts for execution.

KLA Corporation currently trades at $1,188, down from $1,237 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).

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