KLA Corp. upgraded to Buy from Hold at Needham

Needham upgraded KLA Corp. (KLAC) to Buy from Hold with a $750 price target without a price target The firm lowered its 2025 wafer fab equipment estimate from $110B to $100B and launched a 2026 estimate at $100B. Needham sees 2025 as likely the peak WFE, saying the current semiconductor upcycle “will be lukewarm,” and the next downturn could hit in the second half of 2026. The firm was reeviously cautious on KLA due to its high China exposure and management’s “overly bullish” view on China WFE in 2025. The analyst, however, thinks KLA is now the one and only semi cap company that has a “clean slate when it comes to China outlook.” Moreover, the company’s service business growth at 12%-14% annually and the technology upgrade nature of its business suggests that KLA will likely have more stable execution through the next two years as the WFE environment gets challenging, contends Needham.