AI Infrastructure Demand Keeps KLA (KLAC) and Semiconductor Sector on Top for 2026

KLA Corporation (NASDAQ:KLAC) is one of the best performing S&P 500 stocks in 2025. On December 16, Bank of America raised the firm’s price target on KLA Corporation to $1,450 from $1,400, while maintaining a Buy rating on the shares. BofA is adjusting its price targets across the US semiconductor sector and suggests that 2026 marks the halfway point of a decade-long transition toward upgrading traditional IT infrastructure for AI-driven workloads. Stock volatility may persist as investors scrutinize AI returns and hyperscaler spending, but the firm believes that this pressure will be balanced by the expansion of AI factories and LLM developers.

On the same day, Cantor Fitzgerald upgraded KLA Corporation to Overweight from Neutral with a price target of $1,500, up from $1,350. After beating the S&P 500 by 30 points in 2025, the SOX is expected to remain a market leader through 2026. Cantor Fitzgerald believes that the scale of AI infrastructure spending outweighs any short-term cyclical concerns.

Earlier on December 15, Jefferies upgraded the company to Buy from Hold with a price target of $1,500, up from $1,100. The firm cited KLA Corporation’s dominant position in leading-edge manufacturing as AI scales and believes that the current buildout will catalyze demand for advanced chips, memory, and packaging technologies. With the stock’s valuation recently resetting to more attractive levels, Jefferies sees KLA Corporation as a primary beneficiary of the accelerating investment in AI infrastructure.

KLA Corporation (NASDAQ:KLAC), together with its subsidiaries, designs, manufactures, and markets process control, process-enabling, and yield management solutions for the semiconductor and related electronics industries worldwide.

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Disclosure: None. This article is originally published at Insider Monkey.