7. KLA Corp. (NASDAQ:KLAC)
Share Price as of January 19: $757.47
Surge in Share Price in 5 Years: 323.81%
Stock Split Confirmed: No
Number of Hedge Fund Holders: 61
KLA Corp. (NASDAQ:KLAC) designs and manufactures process control, process-enabling, and yield management solutions for the semiconductor and electronics industries. It operates in 3 segments: Semiconductor Process Control, Specialty Semiconductor Process, and PCB and Component Inspection. It offers a range of technologies including wafer inspection, metrology systems, and software solutions to improve production and yield.
Its performance in the September 2024 quarter was driven by the increasing demand for AI, especially in the memory sector, where investments in AI and high-bandwidth memory are positioning memory makers for growth in 2025. This is reflected in the rising demand for AI chips, which drives higher process control intensity. Additionally, the company has been readily adopting AI by integrating it into its products and designing its computer architecture to use GPUs.
KLA Corp.’s (NASDAQ:KLAC) investments in AI-driven innovations are expected to maintain its competitive edge. The company forecasted $2.95 billion in revenue for the December quarter, with non-GAAP gross margin expected to increase to 61.5%. Earlier on January 13, Needham analysts had upgraded the company’s stock from Hold to Buy, setting a price target of $750. This reflected confidence in the company’s ability to outperform competitors in challenging times. Despite challenges in the semiconductor industry, its financial health and consistent profitability position it for growth.
Vltava Fund expressed confidence in the company along with some other key players in the growing semiconductor industry. The firm viewed them as critical investments for long-term growth and stated the following in its Q4 2024 investor letter:
“In the quarter just ended, we added to the portfolio two new companies from the technology sector: Applied Materials and Lam Research. Both are in the same industry as is another of our investments that we have held for some time, KLA Corporation (NASDAQ:KLAC). This industry is termed semiconductor devices and materials. One chapter in Hidden Investment Treasures is devoted to investing in technology companies and, among other things, the controversy over what really constitutes a technology company. As investors, we try to view technology companies not according to the industry into which they are formally classified but by whether the technologies and technological processes used in the production of their products and services are an essential element in value creation or if they are a source of long-term, sustainable competitive advantage. Among the companies that are formally categorized as technology-based and fall into either the Information Technology or the Communications Services sector, we find some that can be said to be just that but also others for which this classification is at least debatable. Similarly, among companies that do not formally belong to these two sectors, we find many that clearly are built to a large extent on technology and base their market positions and competitiveness on it. In the cases of Applied Materials and Lam Research, there can be no doubt that these are technology companies not only as a formality but also in fact.
Dozens of companies are directly or indirectly involved in the production of semiconductors. Within this broad group of companies, there are several without which it would not be possible to produce advanced types of semiconductors in the world today. These include a group of five very well-known companies, each of which has a dominant global position in its particular field, and which together operate more or less as oligopolies. These are Lam Research, Applied Materials, KLA Corporation, ASML, and Tokyo Electron. At the end of the year, we benefited from a significant correction in the share prices of Applied Materials and Lam Research, and, together with KLA Corporation, we now own three of them. We view these as one collective investment into a critical point within a very important segment of the global economy that is growing and will continue to grow over the long term…” (Click here to read the full text)
