Semiconductor manufacturing equipment maker KLA Corporation (NASDAQ: KLAC) reported revenue ahead of Wall Street’s expectations in calendar Q3 2026 (fiscal Q1 2027), with revenue up 28.9% year on year to $4.14 billion. In addition, next quarter’s revenue guidance ($4.7 billion at the midpoint) was surprisingly strong, coming in 4.8% above analysts’ consensus estimates. Its non-GAAP profit of $1.22 per share was 3.5% above analysts’ consensus estimates.
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KLA Corporation (KLAC) Q3 CY2026 highlights:
- Revenue $4.14 billion vs S&P analysts’ consensus estimates of $4.04 billion (28.9% year-on-year growth, 2.3% beat)
- Adjusted EPS $1.22 vs S&P analysts’ consensus estimates of $1.18 (3.5% beat)
- Revenue guidance $4.7 billion at the midpoint for Q4 CY2026, above analysts’ consensus estimates of $4.49 billion
- Adjusted EPS guidance $1.44 at the midpoint for Q4 CY2026, above analysts’ consensus estimates of $1.36
- Free cash flow margin 32.3%, similar to the same quarter last year
- Inventory days outstanding 236, in line with the previous quarter
- Market capitalization $200.5 billion
"KLA's September quarter beat the midpoint of guidance across all key metrics, demonstrating the accelerated growth we expected for the second half of calendar 2026," said Rick Wallace, president and CEO of KLA Corporation. "Process control, and KLA in particular, continues to be critical to the AI ecosystem buildout and benefits from numerous ongoing inflections, including increases in leading-edge designs across foundry and logic, device size and value, memory complexity and performance requirements, and the importance of advanced packaging. In addition, KLA's process, PCB, and component inspection businesses are benefiting from the technology transitions and the rigorous performance requirements of high-performance computing, which further augments the company's growth profile. KLA's market-leading product portfolio and its associated services offerings remain well positioned to address these compelling opportunities as we approach the end of calendar 2026 and look forward to calendar 2027."
Revenue growth
A company’s long-term revenue performance can indicate its overall quality. Any business can deliver a good quarter or two, but many enduring ones grow for years. KLA Corporation’s 14.2% annualized revenue growth over the last five years was impressive. Its growth surpassed the average semiconductor company and shows its offerings resonate with customers. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions (which can sometimes offer opportune times to buy).
Long-term growth is the most important, but short-term results matter for semiconductors because the rapid pace of technological innovation (Moore’s Law) could make yesterday’s hit product obsolete today. KLA Corporation’s annualized revenue growth of 18.9% over the last two years is above its five-year trend, suggesting some bright spots. 
This quarter, KLA Corporation reported year-on-year revenue growth of 28.9%, and its $4.14 billion of revenue topped Wall Street’s consensus estimates by 2.3%. Beyond the beat, this marks 10 straight quarters of growth, showing that the current upcycle is well advanced; a typical upcycle lasts 8-10 quarters. Company management is currently guiding for a 42.5% year-on-year increase in revenue next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 32.2% over the next 12 months, according to S&P. While this projection implies its newer products and services will spur better top-line performance, it is still below average for the sector. At least the company is tracking well in other measures of financial health.
Product demand & outstanding inventory
Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’s capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.
This quarter, KLA Corporation’s DIO came in at 236, which is 3 days below its five-year average. These numbers show that despite the recent increase, there’s no indication of an excessive inventory buildup.
Key takeaways from KLA Corporation’s Q3 results
KLA Corporation delivered a decent quarter, with EPS topping Wall Street’s consensus estimates and next-quarter revenue guidance also ahead of analysts’ consensus estimates. Shares rose 3.2% to $163.90 immediately after the results.
KLA Corporation had a solid quarterly earnings result, but is the stock a good investment? That decision calls for a broader look at valuation, business quality and the latest earnings. For more on KLA Corporation, read our full research report here (it’s free).
