KLA Earnings Beat Estimates; Issues Q3 Guidance
KLA earnings topped Q2 forecasts on Jan. 29, 2026, and its Q3 guidance and robust cash returns should shift near-term positioning toward AI infrastructure.
KEY TAKEAWAYS
- KLA beat Q2 revenue and EPS expectations, driven by product strength and improved margins.
- Operating cash flow and free cash flow supported sizable buybacks and dividends.
- Company issued Q3 guidance that frames near-term growth and ties performance to AI infrastructure.
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KLA Corporation reported fiscal 2026 second-quarter strength on Jan. 29, 2026, beating Wall Street forecasts and issuing third-quarter revenue and profit guidance. Management linked the quarter’s performance to AI-infrastructure demand, which supported margins and cash returns.
Q2 Results and Capital Returns
KLA reported fiscal 2026 second-quarter revenue of $3,297 million for the period ended Dec. 31, 2025, with product sales of $2,511 million and services of $786 million. This exceeded the company’s prior guidance midpoint and consensus estimates, the company said in a press release.
GAAP net income was $1,146 million, with GAAP diluted earnings per share of $8.68. Non-GAAP diluted EPS rose 7.9% year over year to $8.85, slightly above the consensus range. Non-GAAP gross margin was 62.6%, about 60 basis points above the guidance midpoint, while GAAP gross margin was 60.6%. Non-GAAP operating expenses totaled $654 million, including $384 million in research and development and $270 million in selling, general, and administrative costs. The non-GAAP operating margin was 42.8%.
Operating cash flow reached $1,368 million, and free cash flow was $1,262 million for the quarter. On a trailing-12-month basis, those figures were $4,766 million and $4,382 million, respectively.
Capital returns totaled $797 million, consisting of $548 million in share repurchases and $250 million in dividends. Trailing-12-month capital returns amounted to $3,009 million. At quarter-end, total assets were $16,720 million, cash and cash equivalents were $2,452 million, implied total debt was about $5,900 million, and stockholders’ equity stood at $5,466 million.
Q3 Guidance and AI Infrastructure Demand
For fiscal third quarter ending Mar. 31, 2026, KLA projected revenues of $3,350 million, plus or minus $150 million, and non-GAAP diluted EPS of $9.08, plus or minus $0.78. It forecast non-GAAP gross margin near 61.8% ±1.0% and GAAP gross margin around 60.6% ±1.0%, with operating expenses roughly $645 million.
Management said the company benefits from the AI infrastructure buildout across foundry/logic, memory, advanced packaging, and services. For calendar 2026, KLA expects gross margins near 62.0% ±50 basis points and anticipates operating expenses to rise about $15 million sequentially per quarter to support product development and infrastructure related to AI demand.
