While reviewing the Nasdaq 100’s third-quarter laggards on the October 1 episode of Mad Money, Jim Cramer singled out KLA Corporation (NASDAQ:KLAC) as a stock he would buy. He said:
Alright, what about the Nasdaq 100, which finished up 2.47%?… Losers? Alright, there’s that AppLovin again, down 44% but here’s another one, one that I’d buy, KLA Corp, the semiconductor capital equipment maker. We have a widespread chip shortage that can’t be solved without KLA. Hence what we saw today with Micron. Crazy that the stock’s down 35%.
Cramer recommended buying the stock in small doses in a September episode.
Advanced Chips Increase Demand For Process Control
KLA Corporation supplies inspection, measurement, and other process-control equipment used in semiconductor manufacturing. Management said in its July earnings release that more sophisticated chip designs and increasingly complex memory specifications were driving demand for process control. It also identified advanced packaging as another source of growth tied to AI infrastructure investment.
Fiscal fourth-quarter 2026 revenue reached approximately $3.66 billion, compared with approximately $3.18 billion a year earlier. GAAP net income increased to approximately $1.36 billion from approximately $1.20 billion. The company generated $817.1 million in quarterly free cash flow and approximately $3.77 billion for the full fiscal year.
For the September quarter (Q1 FY27), management forecast revenue of $3.8 billion to $4.2 billion and non-GAAP diluted EPS of $1.06 to $1.26. The guidance followed fiscal fourth-quarter non-GAAP EPS of $1.05. These per-share figures reflect KLA’s June ten-for-one stock split. KLAC is one of the two chip-equipment stocks that just crushed Nvidia. Which stock is the other one?
China Restrictions And Customer Spending Cycles
China accounted for 29.8% of KLA Corporation’s fiscal 2026 revenue. In its annual filing, the company noted that export restrictions could result in lost sales unless affected orders were replaced. It also disclosed that some China-bound products had been held up by U.S. Customs and Border Protection over questions concerning customers or equipment capabilities. KLA could not assure that those shipments would be cleared promptly or without a license.
The company’s dependence on semiconductor capital spending adds another risk. KLA mentioned that the elevated investment supporting AI-related growth might not be sustained and that customer orders could be delayed, reduced, or canceled. It noted that orders are generally subject to cancellation or delay with limited or no penalty.
The shares also retain a premium to major semiconductor equipment peers. KLA traded at approximately 35x forward earnings, compared with approximately 29x for ASML Holding and 33.6x for Lam Research. The difference was modest against Lam but larger against ASML; the quarterly decline had not left KLA at a discount to either company on this measure. Cramer weighed in on KLA, Lam and APLD during an August episode.
Ten Additional Funds Hold KLA
The number of hedge funds holding KLA Corporation rose to 81 in Q2 from 71 in Q1, based on Insider Monkey’s tracking of more than 1,000 funds. Despite decreasing its position by 41% in the company, Arrowstreet Capital remained the company’s largest hedge fund holder. Short interest was 2.02% of the public float, indicating limited aggregate short exposure rather than a heavily shorted stock.
Cramer’s buy call rests on KLA’s role in expanding chip production. Management’s demand commentary and revenue outlook support that business case, while China restrictions, customer spending cycles, and the peer valuation comparison remain reasons for caution.
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