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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.

While we acknowledge the potential of KLAC to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than KLAC and that has 100x upside potential, check out our report about this cheapest AI stock.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now.

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

The $250 Trillion AI Hype is Real. A few years from now, you’ll probably wish you’d bought this stock.

When Jeff Bezos said that one breakthrough technology would shape Amazon’s destiny, even Wall Street’s biggest analysts were caught off guard.

Fast forward a year and Amazon’s new CEO Andy Jassy described generative AI as a “once-in-a-lifetime” technology that is already being used across Amazon to reinvent customer experiences.

At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000.

Do the math. According to Musk, this technology could be worth $250 trillion by 2040.

Put another way, that’s roughly equal to:

  • 175 Teslas
  • 107 Amazons
  • 140 Metas
  • 84 Googles
  • 65 Microsofts
  • And 55 Nvidias

And here’s the wild part — this $250 trillion wave isn’t tied to one company, but to an entire ecosystem of AI innovators set to reshape the global economy.

It’s a leap so massive, it could reshape how businesses, governments, and consumers operate worldwide.

Even if that $250 trillion figure sounds ambitious, major firms like PwC and McKinsey still see AI unlocking multi-trillion-dollar potential.

How could anything be worth that much?

The answer lies in a breakthrough so powerful it’s redefining how humanity works, learns, and creates.

And this breakthrough has already set off a frenzy among hedge funds and Wall Street’s top investors.

What most investors don’t realize is that one under-owned company holds the key to this $250 trillion revolution.

In fact, Verge argues this company’s supercheap AI technology should concern rivals.

Before I reveal the details, let’s talk about how some of the richest people on the planet are positioning themselves.

  • Bill Gates sees artificial intelligence as the “biggest technological advance in my lifetime,” more transformative than the internet or personal computer, capable of improving healthcare, education, and addressing climate change.
  • Larry Ellison — through Oracle, is spending billions on Nvidia chips and partnering with Cohere to embed generative AI across Oracle’s cloud and apps.
  • Warren Buffett — not known for tech hype — says this breakthrough could have a ‘hugely beneficial social impact.

When billionaires from Silicon Valley to Wall Street line up behind the same idea — you know it’s worth paying attention to.

Even as we admire what Tesla, Nvidia, Alphabet, and Microsoft have built, we believe an even greater opportunity lies elsewhere…

But the real story isn’t Nvidia — it’s a much smaller company quietly improving the critical technology that makes this entire revolution possible.

And judging by what I’m hearing from both Silicon Valley insiders and Wall Street veterans…

This prediction might not be bold at all:

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