New York, January 30, 2026, 12:24 EST — Regular session
- KLA shares tumbled roughly 13% during midday trading following its quarterly report
- Investors are scrutinizing KLA’s outlook for 2026 wafer-fab equipment and the ongoing supply bottlenecks
- Wall Street target hikes roll in amid a broad selloff
KLA Corp shares dropped 12.7% on Friday, erasing gains made after its earnings report. Investors seemed to balk at the chip-tool maker’s outlook, which struggled to keep pace with a high bar set by the sector’s recent rally. The stock slipped to $1,471.07, down $213.64 in midday trading.
This matters because KLA’s process-control results often set the tone for how traders value the next wave of semiconductor capital expenditures. Process control involves the inspection and measurement tools chipmakers rely on to detect defects and boost yields. These investments usually accelerate when fabs tackle more challenging manufacturing stages.
KLA reported fiscal second-quarter revenue of $3.30 billion late Thursday, with adjusted earnings of $8.85 per share—both surpassing the midpoints of its forecast. The company’s outlook for the March quarter calls for revenue around $3.35 billion, plus or minus $150 million. CEO Rick Wallace described the results as “a record quarter” for both revenue and free cash flow, noting strong demand driven by AI-related buildout across various end markets. (KLA Corporation)
During the conference call, CFO Bren Higgins projected the “core WFE” market—wafer-fab equipment that chipmakers use to produce semiconductors—would grow “in the high single- to low double-digit %.” He put the total market at around $130 billion when factoring in advanced packaging. Higgins also noted that customer lead times are lengthening due to supply constraints, which might limit growth in early 2026, and flagged a margin hit from rising DRAM chip costs embedded in some of KLA’s systems. (Investing)
Analysts wasted no time revising their numbers. Citigroup hiked its price target to $1,800 from $1,450, maintaining a buy rating. Jefferies and JPMorgan also bumped up their targets and stayed bullish, according to MarketScreener’s summary of brokerage moves. (MarketScreener)
The slide weighed on the wider chip-equipment sector. Lam Research lost 2.3%, Applied Materials dropped 3.3%, and ASML slipped 1.3%. The iShares Semiconductor ETF took a 2.4% hit, while the Nasdaq-heavy QQQ edged down roughly 1.0%.
KLA’s most recent figures came out in an 8-K filing dated Jan. 29, including the earnings release attached as an exhibit, according to a company filing. (KLA Corporation)
That said, the risks are clear. KLA flagged in its earnings report that changing U.S. export regulations might restrict sales and services to some Chinese clients. It also highlighted ongoing supply-chain challenges and broader macroeconomic threats—factors that can rapidly pressure orders in this cyclical equipment sector. (KLA Corporation)
Traders are eager for specifics on which parts of the supply chain remain clogged, how quickly those issues might clear up, and if KLA’s outlook for WFE growth still stands amid chipmakers updating their capex plans. The next major milestone arrives at management’s investor day on March 12.
