10 Best Semiconductor Equipment Stocks to Buy Now

3. KLA Corporation (NASDAQ:KLAC)

Number of Hedge Fund Holders In Q3 2024: 61

KLA Corporation (NASDAQ:KLAC) provides etching, inspection, deposition, and other equipment used in the chip fabrication process. Its strengths are in the inspection end of the chip fabrication equipment sector. The shares are up by 16.7% year-to-date following a massive 19% drop in October after investors became worried about a slowdown in the industry after chip-making equipment manufacturer ASML disappointed with its 2025 guidance. KLA Corporation (NASDAQ:KLAC) is also particularly vulnerable to American chip sanctions against China that prevent US firms from selling their machines. The vulnerability stems from the fact that as of Q3, 42% of the firm’s revenue came from China. However, the firm has seen tailwinds from AI demand on its income statement, which led to its fourth-quarter revenue guidance of $2.95 billion beating analyst estimates of $2.86 billion. KLA Corporation (NASDAQ:KLAC) also has a strong partnership with TSMC that provides it with stable revenue from the world’s largest contract chip manufacturer.

KLA Corporation (NASDAQ:KLAC)’s management shared details about its AI revenue during the Q3 2024 earnings call. Here is what they said:

“We also continue to see AI as an important driver and enabler of our business. Growth in demand for AI CHIPS supports rising process control intensity, which benefits KLA meaningfully. Additionally, KLA was an early adopter in using and incorporating AI into our products and designing our computer architecture to leverage GPUs. KLA’s future product enhancements will leverage AI to improve the performance and customer cost of ownership of our leading-edge systems.”