KLA’s leading market share in the process-control segment of wafer fabrication equipment will serve as a key driver for its long-term growth, Bernstein said. The investment firm initiated coverage of the semiconductor equipment maker at an outperform rating and set a price target of $1,700. That implies the stock can jump 18% from current levels. Analyst Stacy Rasgon applauded the company as the dominant force in the process control industry, which he called a $14.3 billion subsector that is crucial for semiconductor manufacturing within the larger $112 billion global wafer fabrication equipment market. KLAC 1Y mountain KLAC 1Y chart This subsector has already grown at an 18% compound annual growth rate between 2019 and 2024, and Rasgon thinks it could rise even further over the next five years. He predicts an 11% compound annual growth rate for the stock between 2024 and 2029. “KLA should benefit from this as the sector’s #1 player by far, with > 6x the scale of its next largest competitor in the space at ~57% overall market share which it has even expanded over the last several years. We estimate that share gains will likely continue due to a strong competitive position and growth-favorable mix within Process Control subsegments,” the analyst wrote. Rasgon also believes that the company and subsector stands strong enough to weather against rising Chinese competition. “Process control should also be more insulated than other WFE segments from local Chinese competition due to its complexity, thus limiting substitution risk,” he wrote. “Moreover, KLA has already embedded China normalization into its CY26 outlook, somewhat derisking its China numbers for next year.” The analyst added that he sees potential upside to medium-term numbers as the company’s services business is likely to accelerate from here. Another tailwind would come from Intel continuing to push its foundry business, which would necessitate structurally higher process control tool investment levels. Rasgon also highlighted KLA’s strong management team, which has in the past struck a good balance between returning cash to shareholders and making organic and inorganic investments. Shares of KLA Corporation have soared 106% over the past 12 months.
