KLA Corporation (NASDAQ: KLAC) has received a significant boost from Jefferies, which upgraded the semiconductor equipment maker to a “Buy” rating on December 15. The investment firm also increased its price target for KLA from $1,100 to $1,500, emphasizing that the company’s growth trajectory is “just beginning.” This optimism is rooted in the expanding applications of AI accelerators and a strong outlook for demand in leading-edge and advanced packaging technologies.
Jefferies identified not only KLA but also major players like Nvidia and Broadcom as companies poised to benefit from the ongoing development of AI infrastructure. The firm highlighted that with the increasing complexity of chips, KLA stands to gain from the rising intensity of process control, which aligns with its core competencies.
According to Jefferies, “We are seeing power and performance move to the forefront from AI servers, pushing node transitions faster and expanding the use case beyond handsets.” The firm noted that as expectations for accelerators beyond Nvidia grow, demand for cutting-edge technology is also expected to rise.
As the semiconductor industry faces growing packaging complexity, KLA’s business model is well-positioned to capitalize on the need for enhanced process control. Jefferies addressed concerns about China, noting that while exposure to the Chinese market remains a factor, KLA’s revenue from China is “derisked” at approximately 25% for the 2026 fiscal year. The firm pointed to historical patterns suggesting potential upside, despite conservative guidance from semiconductor capital equipment companies regarding China.
Jefferies has adjusted its price target to $1,500 based on a multiple of 30 times its earnings per share (EPS) estimate of $50 for fiscal 2028. This adjustment reflects a growing confidence in KLA’s ability to navigate market challenges while supporting the semiconductor industry’s evolution.
KLA Corporation specializes in designing, manufacturing, and marketing process control, process-enabling, and yield management solutions for the semiconductor and related electronics industries worldwide. While the firm acknowledges the risks associated with investing in KLA, it remains optimistic about the potential for higher returns in AI-focused stocks.
For investors seeking opportunities in the AI sector, KLA’s recent upgrade may signal a promising path forward, particularly as the semiconductor landscape continues to evolve.
