Investing.com -- Oppenheimer upgraded KLA Corporation (NASDAQ:KLAC) to Outperform and raised its price target to $850 per share in a note Thursday, citing the company’s strong Q1 2025 results and robust outlook.
The firm adjusted its FY25-FY26 earnings estimates upward by 2% and raised the price target from $750 to $850, now valuing KLA at 25 times projected FY26 earnings—a premium reflecting KLA’s historical standing in the AI-driven era.
The firm highlights KLA’s role as a leader in semiconductor metrology and inspection, describing it as the “Microsoft of metrology and inspection.”
While Oppenheimer initially held a more conservative stance on valuation and uncertainties around China, they said KLA’s 20% drop from its all-time high, coupled with improving market conditions, presented a timely entry point.
"[The] recent stock volatility is more a function of expectations, which are now acceptable," stated Oppenheimer.
Oppenheimer also noted that regulatory concerns surrounding AI chip exports to China appear to be tapering off for the rest of the year, which refocuses investor attention on KLA’s growth potential in AI-driven semiconductor demand.
The firm emphasized KLA’s advantages in a concentrated market, calling it a “dominant franchise” with “oligopoly participation.”
KLA’s robust fundamentals, including a 40% GAAP operating margin and a 30% free cash flow conversion rate, support what Oppenheimer sees as promising double-digit growth potential.
This content was originally published on Investing.com
