KLA Corporation

Rapidly escalating cost of DRAM chips used in image processing computers creating a 75 to 100 basis point gross margin headwind for calendar 2026, expected to be transitory and normalize as DRAM capacity additions accelerate.

Quarterly free cash flow was a record $1.26 billion, with full-year free cash flow growing 30% to $4.4 billion and total capital returns of $3 billion over the past twelve months.

Lead times extending due to supply constraints, particularly in optical components, limiting first-half growth with the company virtually sold out across most products, and second half expected to accelerate to high single to low double digit growth.

Services grew to $786 million in the December quarter, up 6% sequentially and 18% year-over-year, marking the sixteenth consecutive year of annual service revenue growth with a compounded annual growth rate greater than 12%.