KLA Stock Gains As Q2 Earnings Beat Fuels Wall Street Optimism: Retail Shrugs Off China Tariffs, DeepSeek Risks
Wall Street sees KLA outperforming peers as AI demand accelerates and resilience against U.S. export tariffs.
FollowKLA Corp. (KLAC) stock rose over 2% at market open on Friday after reporting a fiscal second-quarter earnings beat that prompted a slew of price hikes from Wall Street.
The semiconductor equipment maker posted earnings per share (EPS) of $8.20, exceeding analysts’ consensus of $7.75, according to Stocktwits data.
Revenue for the quarter came in at $3.08 billion, beating estimates of $2.95 billion.
CEO Rick Wallace highlighted the company’s resilience despite new U.S. export controls that came into effect late in the quarter.
“KLA’s December quarter results were above the midpoint of our guidance ranges despite navigating through the business impact of new U.S. government export controls,” Wallace said.
He also reaffirmed the company’s outlook, forecasting third-quarter revenue of approximately $3 billion, plus or minus $150 million. EPS is expected to be around $8.05, plus or minus $0.60.
Wallace emphasized the role of AI in KLA’s business, stating, “AI continues to be a crucial catalyst for KLA.”
He cited growing demand for advanced semiconductors, driven by higher wafer volumes, complex chip designs, and accelerated product cycles.
Reacting to the earnings, Deutsche Bank raised its price target to $850, up from $725, while maintaining a ‘Buy’ rating citing KLA’s revenue upside and momentum in high-bandwidth memory and leading-edge spending.
Barclays increased its target from $700 to $760, keeping an Equal Weight rating, noting strength in NAND and full-year growth above market expectations.
Wells Fargo, Bank of America (BoFA), Cantor Fitzgerald and TD Cowen also issued bullish takes on the stock.
Retail investors on Stocktwits remained bullish, shrugging off concerns about China tariffs and competition from DeepSeek AI.
Wallace addressed potential risks from China’s DeepSeek AI, stating that demand for advanced semiconductors remains strong.
He reaffirmed KLA’s belief that AI adoption will continue driving semiconductor growth rather than diminishing demand.
KLA previously estimated that U.S. export restrictions on China could reduce 2025 revenue by approximately $500 million, plus or minus $100 million, with about 70% of the impact affecting its systems business.
Wallace noted that while licensing opportunities could offset some of this impact, delays in U.S. government approvals remain a challenge.
Friday’s gains marked the fourth consecutive day of KLA’s stock rallying. Shares have climbed 27% over the past year and are up 17% year-to-date.
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