# KLA Stock Q3 2026: Revenue Up 29% as AI Lifts Process Control
> KLA stock Q3 2026: revenue rose 29% to $4.14bn, GAAP operating margin hit 45% and KLA sees a $200bn-plus chip equipment market in 2027. KLAC earnings.

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## Facts
- Ticker: KLAC
- QSILabs fair value: $85.55 USD
- Price: $153.11 (as of 2026-11-02)
- As of: Q1 FY2027 results (quarter ended 2026-09-30, reported 2026-10-28) and Form 10-Q filed 2026-10-29; price as of 2026-11-02 close
- Fiscal period: Q1 FY2027 (July-September 2026, calendar Q3 2026)
- Published: 2026-11-02
- Updated: 2026-11-02
- Author: QSI Labs Research
- Canonical: https://www.quantitativesuperintelligencelabs.com/research/kla-stock-q3-2026-earnings-process-control-ai/

## Short answer
KLA stock Q3 2026 comes down to a quarter in which demand for chip inspection and measurement tools ran ahead of what KLA could ship. Revenue for the three months to 30 September 2026, KLA's first quarter of fiscal 2027, rose 28.9% to $4.14bn, which chief executive Rick Wallace called "another record". GAAP operating margin reached 45.0%, GAAP diluted EPS rose 38.8% to $1.18 and free cash flow rose 25.4% to $1.34bn. KLA guided December-quarter revenue to $4.7bn, plus or minus $0.2bn, and said it expects the wafer equipment market to exceed $200bn in calendar 2027. Our discounted cash flow model values KLA at $85.55 a share, about 44% below the $153.11 close on 2 November 2026. The share price assumes faster growth for longer, or a lower cost of capital, than our model, which follows consensus to fiscal 2029 and KLA's own 2030 targets.

## Key takeaways
- Revenue up 28.9%. Q1 FY2027 revenue was $4,136m, against $3,210m a year earlier and $3,658m in the June quarter. Product revenue rose 33.3% to $3,286m and services rose 14.2% to $851m.
- Inspection led. Wafer Inspection revenue rose 37.3% to $2,111m, 51% of the total, and Patterning rose 29.2% to $863m. KLA expects advanced packaging process control revenue of at least $1.1bn in calendar 2026, up more than 70%.
- China's share fell. China was 34.5% of revenue, against 39.5% a year earlier, although sales there still rose 12.5% to $1,426m. North America more than doubled to $618m and Korea rose 66.1% to $497m.
- Margins rose. GAAP gross margin was 61.9% and GAAP operating margin 45.0%, against 41.7% a year earlier. On KLA's non-GAAP measure operating margin was 46.1%, which Wallace said was above 46% "for the first time ever".
- Guidance points higher. KLA guided December-quarter revenue to $4.7bn, 42.5% above a year earlier, and GAAP EPS to $1.41, plus or minus $0.11. Chief financial officer Bren Higgins said "I am still behind in supply".
- Cash returned. KLA bought back $936m of shares and paid $305m of dividends in the quarter, 93% of its $1,336m of free cash flow. The dividend is $0.23 a share a quarter.
- Our value: $85.55 a share, against a $153.11 close on 2 November 2026. A two-stage cross-check gives $87.67, and the highest value in our sensitivity grid is $100.96. Analysts' average target is $217.58.
- What to watch. Lead times of about 12 months, the cost of memory chips used in KLA's tools, the China share of revenue, which KLA expects at 27% to 29% in the December quarter, and whether the wafer equipment market passes $200bn in 2027.

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