Wells Fargo’s semiconductor equipment analyst Joseph Quatrochi raised KLA Corp.’s rating to overweight with a price target of $1,600, citing accelerating demand for next-generation process control systems. Quatrochi highlighted that as leading foundries ramp production of 2-nanometer technology in 2026, KLA’s order book should benefit from the increased need for precision inspection and metrology tools. He also pointed to Intel’s push to intensify process control investments as a secondary growth driver outside of Taiwan Semiconductor Manufacturing Company.

Shares of KLA jumped after Taiwan Semiconductor Manufacturing Company posted fourth-quarter results including $2.98 per share in earnings on $32.7 billion in revenue, handily beating consensus. AMD’s forecast for robust uptake of 5-nm and 3-nm chips, which account for 63% of TSMC’s shipments, further supports expectations that KLA will see sustained equipment sales through early 2026. The combination of leading-edge process nodes and high-performance computing applications is expected to underpin double-digit growth in semiconductor capital expenditures.

Quatrochi projects KLA revenue will grow from $12.7 billion in 2025 to $14.1 billion in 2026 and $15.7 billion in 2027, implying an 11% compound annual increase. He sees earnings per share rising from $35.36 this year to $38.87 next year and $45.17 in 2027, a 13% annual expansion. At current multiples—45 times trailing earnings—the stock trades at a price-to-earnings-to-growth ratio above 3, raising questions about whether the valuation adequately reflects the growth trajectory. Investors will be weighing the premium valuation against the potential for sustained high-single to low-double-digit earnings gains.