Wells Fargo Downgrades KLA Corporation (KLAC) Stock to Equal Weight

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2 days ago

KLA Corporation (NASDAQ:KLAC) is one of the Top 10 Software and Technology Stocks to Buy Now. Wells Fargo downgraded the company's stock to 'Equal Weight' from 'Overweight' with a price objective of $920, up from the prior target of $870, as reported by The Fly. As per the firm, the company's shares have significantly outperformed the group and trade well above the median price to earnings at ~26x. Wells Fargo anticipates KLA Corporation (NASDAQ:KLAC) to outperform the wafer fab equipment (WFE) market overall. However, it questioned the ability to provide further upside.
The inner workings of a semiconductor manufacturing facility, neon hued machines humming with activity.
KLA Corporation (NASDAQ:KLAC) demonstrated optimism about its growing relevancy in semiconductor manufacturing. The leadership in process control remains a critical enabler of leading-edge AI investments by its customers. In Q3 2025, the company saw total revenues of $3.06 billion. It saw GAAP diluted EPS of $8.16 and non-GAAP diluted EPS of $8.41. Both of these were above the midpoints of their respective guidance ranges.
Parnassus Investments, an investment management company, released the Q4 2024 investor letter. Here is what the fund said:
'We also added several new positions, including two in Information Technology: Workday, a category leader for enterprise cloud applications for finance and human resources, and KLA Corporation (NASDAQ:KLAC), a leader in semiconductor process control. KLA, a leader in semiconductor process control, benefits from inherently high switching costs, structurally higher demand for advanced semiconductors and increasingly complex semiconductor manufacturing. The company has a strong management team that is positioning it well for long-term growth. Concerns about weaker demand in China have impacted KLA's stock price recently, but we believe the secular growth in other regions could offset the risk in the longer term.'
While we acknowledge the potential of KLAC as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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