KLA Corporation (NASDAQ:KLAC) stock tumbled Friday as investors digested earnings and guidance that landed near expectations but failed to impress.

An analyst kept a neutral stance, pointing to valuation concerns and a near-term industry shift toward memory spending.

Quarterly Update

On Thursday, the company reported second-quarter earnings of $8.85 per share, which beat the analyst consensus estimate of $8.80, according to data from Benzinga Pro.

KLA expects third quarter adjusted EPS of $8.30 to $9.86, versus the $8.93 analyst estimate, and revenue of $3.2 billion to $3.5 billion, versus the $3.28 billion analyst estimate.

Analyst’s Take

Goldman Sachs analyst James Schneider reiterated the Neutral rating on the stock, raising the price forecast from $1,280 to $1,450.

The stock could trade lower after results and guidance met estimates but missed elevated investor expectations, the analyst writes.

Schneider said KLA remains well positioned with a leading process control product portfolio and long-term share gains.

However, he kept a Neutral rating, favoring companies with stronger exposure to etch and deposition tools.

Per the analyst, near-term industry spending appears tilted toward DRAM rather than process control.

He also described the stock's valuation as relatively full at current levels.

Schneider noted quarterly revenue matched Wall Street expectations, while gross margin came in slightly above consensus.

He said non-GAAP earnings landed near Street estimates but trailed his firm's forecast modestly.

Systems revenue met expectations, while services revenue exceeded both internal and consensus projections.

Management expects total wafer fab equipment spending to reach about $135 billion in 2026, including advanced packaging.

Core WFE spending is projected to grow high-single to low-double digits to roughly $120 billion.

Schneider said KLA expects moderate revenue growth in early 2026, accelerating later in the year.

He said management expects China's WFE market to recover in 2026 after a modest decline in 2025. China revenue is expected to contribute a mid-to-high 20% share next year.

Schneider noted management slightly lowered advanced packaging growth expectations but reaffirmed strong momentum.

KLAC Price Action: KLA shares were down 12.33% at $1477.00 at the time of publication on Friday, according to Benzinga Pro data.

Photo by T. Schneider via Shutterstock