KLA Earnings: Signs of a Rebound in Chip Equipment Spending Spark Optimism

We raise our fair value estimate for shares of wide-moat KLA to $530 from $510 after the firm’s March-quarter results came in above our expectations. Guidance for the June quarter is in line with our forecasts and also tracks well with our longer-term recovery expectations for semiconductor equipment spending. We continue to expect KLA to grow in line with the wafer front-end equipment market in calendar 2024 following a cyclical downturn resulting in revenue decline over calendar 2023. Even with our fair value increase supported by increased confidence in a multiyear recovery, we continue to view the stock as overvalued.