KLA Signals Continued Strong Growth at Goldman Sachs Communacopia + Technology Conference

# What KLA reported KLA presented at the Goldman Sachs Communacopia + Technology Conference with a confident growth outlook. Management described demand conditions as strong, driven by artificial intelligence infrastructure, advanced packaging, and new chip factory investments. The company flagged higher supply costs and tight lead times in parts of its supply chain, but said those issues have not derailed order visibility.

# Financial trends and guidance KLA laid out recent revenue trends and profitability metrics:

• 2024 revenue growth: 12%
• 2025 revenue growth: 19%
• 2026 guidance: low-20% revenue growth range
• Three-year operating margin improvement: more than 400 basis points
• Incremental operating margins: near the high end of the company's 40%–50% target range

Management said pricing discipline and execution helped translate strong demand into operating leverage while scaling the business.

# Backlog and market sizing KLA reported disclosed backlog above $12 billion as of its August 10-K filing. Management said that backlog provides strong visibility into both 2026 and 2027 demand.

Earlier in the year KLA estimated the total addressable semiconductor equipment market at $135–$140 billion. At the conference the company updated that estimate to the low $150 billion range, implying faster industry growth than previously expected.

# Technology and operational shifts KLA attributed rising process control intensity to several industry trends that make chips harder to build and more expensive to perfect:

• AI infrastructure driving large-scale chip investments
• Gate-all-around transistors at 2-nanometer design rules increasing inspection needs
• High-NA EUV lithography reducing feature sizes and making defects harder to detect
• HBM memory stacks and larger die sizes increasing yield risk and defect cost

To handle massive image volumes, KLA described a move to a GPU-based compute architecture for higher throughput and efficiency. The company said a high-end system can process about one petabyte of images per day. KLA also said it embeds AI across its product portfolio to prioritize defects that matter most to customers and applies AI internally for software development, debugging, repetitive tasks, and parts of the supply chain.

KLA noted it is spending more on AI tokens than expected, but views that spending as an operating investment.

# Advanced packaging as a growth engine Advanced packaging emerged as a standout growth area. KLA provided share and growth figures:

• Advanced packaging share in 2023: 2%
• Advanced packaging share in 2025: 7%–8%
• Historical share five to six years ago: about 10%
• Current share in the broader advanced packaging market: 50%–57%
• Advanced packaging business growth: roughly 40% over the past couple of years

Management said chipmakers moving functions into packages and tighter defect control needs are making advanced packaging a larger addressable opportunity for KLA.

# Management's forward view KLA expects 2027 revenue to grow at least as fast as 2026 and believes momentum can extend into 2028 and beyond, supported by backlog, market sizing revisions, and secular technology shifts such as AI and advanced packaging.

Overall, the message was that strong end-market demand, higher process control intensity, and share gains in advanced packaging are combining to sustain revenue and margin momentum despite some supply-cost pressures.