KLA’s Mixed Prospects: Opportunities in Advanced Packaging and Challenges in Competitive Landscape Justify Hold Rating

Analyst Joseph Moore of Morgan Stanley maintained a Hold rating on KLA (KLAC – Research Report), retaining the price target of $748.00.

Joseph Moore has given his Hold rating due to a combination of factors that reflect both opportunities and challenges for KLA. The company has shown potential for outperformance in 2025, driven by unique factors such as increased design starts at leading foundry customers and a positive outlook for market share gains from 3nm to 2nm processes. Additionally, KLA’s growth in advanced packaging revenue and the increasing process control intensity in HBM are promising aspects that contribute to its long-term growth prospects.
However, there are also some constraints that justify a Hold rating. The e-beam technology, while gaining traction, is still seen as complementary to optical solutions, and its growth is expected to be controlled. Furthermore, while KLA is transitioning to GPU for image processing to achieve cost and efficiency benefits, these advancements are balanced by the competitive landscape and the challenges associated with maintaining growth momentum. These mixed factors lead to a cautious outlook, resulting in the Hold recommendation.