KLA: Secular Process Control Tailwinds and Financial Discipline Drive Accelerating Growth Into 2027

TD Cowen analyst Krish Sankar has maintained their bullish stance on KLAC stock, giving a Buy rating today.

Krish Sankar has given his Buy rating due to a combination of factors that underscore KLA’s durable growth profile and leverage to key semiconductor trends. He highlights that KLA’s process control systems are poised for robust expansion, with management and his forecasts pointing to solid double‑digit growth in 2026 and an even stronger ramp into 2027 as leading‑edge foundry and logic customers increase front‑end investments. He also views the current debate around wafer fab equipment spending as more indicative of certain peers (like Lam Research) outperforming the market rather than KLA underperforming, reinforcing the idea that KLA’s growth story remains intact. In addition, Sankar notes that KLA’s disciplined operating expense management and best‑in‑class free cash flow generation support the investment case, particularly as revenue accelerates in the back half of 2026 and into 2027.

At the same time, Sankar acknowledges some headwinds, such as margin pressure from higher DRAM component costs, potential capacity constraints in certain product lines, and elevated sector valuations that could challenge some investors’ appetite. Nonetheless, he believes these issues are manageable in light of KLA’s strong positioning in process control and advanced packaging, where the company expects continued healthy growth following a very strong 2025. He expects leading‑edge foundry to be the fastest‑growing wafer fab equipment sub‑segment on a multi‑year basis, which should disproportionately benefit KLA given its exposure and technology leadership. Overall, the combination of secular tailwinds, accelerating growth into 2027, and strong financial discipline underpins his conviction in maintaining a Buy rating on the stock.

According to TipRanks, Sankar is a top 100 analyst with an average return of 36.3% and a 65.78% success rate. Sankar covers the Technology sector, focusing on stocks such as Micron, KLA, and Apple.

In another report released today, Stifel Nicolaus also maintained a Buy rating on the stock with a $1,700.00 price target.