KLA's machines help chipmakers catch flaws, and its sales rose 29% in the September 2026 quarter amid AI investment. The question is whether the surge lasts and turns into cash while dividends and buybacks absorb nearly all free cash flow.
The chip inside your phone or laptop may have been checked by a KLA machine before it left the factory. A tiny flaw can ruin a chip, so chipmakers inspect and measure their silicon wafers (thin discs on which chips are built) at every stage. KLA makes the machines that spot those defects and take extremely precise measurements. Most of its customers make memory chips, which store data, or logic chips, which process it. It earns by selling these tools and keeping them running.
Chipmakers pay KLA for yield, the share of chips on each wafer that come out working. Inspection and measurement brought $12.2 billion of KLA's $13.6 billion revenue in , the year to June 2026. KLA records a tool sale when the machine passes to the customer, so these sales follow chipmakers' investment plans. Services, almost a quarter of revenue, keep installed tools working. Buyers are few: one customer accounted for about 19% of fiscal 2026 revenue. The costs that matter are heavy research spending and service centres around the world, needed to hold off rivals. KLA keeps a large share of each sale only while customers still value its next generation of tools.
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