KLA's Advanced Packaging Revenue Surge: A Buy Signal Amid AI-Driven Semiconductor Momentum?

The semiconductor industry is undergoing a seismic shift, driven by the insatiable demand for artificial intelligence (AI) and high-bandwidth memory (HBM) solutions. At the forefront of this transformation is KLA Corporation (NASDAQ:KLAC), whose Advanced Packaging segment has emerged as a critical growth engine. With total revenue surging to $3.21 billion in Q3 2025-a 13% year-over-year increase-KLA has outperformed Wall Street estimates and demonstrated resilience in a volatile market, according to The Globe and Mail. But does this growth signal a compelling buy opportunity, or is the stock trading at a premium that reflects already-anticipated AI-driven tailwinds?

The AI-Driven Semiconductor Gold Rush

The semiconductor equipment industry's average growth rate for Q3 2023 was 23.2% year-over-year, fueled by robust demand in Asia Pacific and the Americas, according to Deloitte. However, the Advanced Packaging segment-a niche but vital part of the value chain-faces a more nuanced trajectory. According to SEMI, back-end equipment sales, which include packaging, are projected to grow by 7.7% in 2025, reaching $5.4 billion. This growth is underpinned by the increasing complexity of chip architectures required for AI applications, such as HBM and 3D packaging.

KLA's position in this space is formidable. While the company does not disclose Advanced Packaging revenue separately, its Specialty Semiconductor Process segment-a proxy for advanced packaging-reported $128.4 million in Q3 2023, up 9.4% from $117.3 million in Q3 2022, per a KLA press release. This outpaces the 7.7% industry average, suggesting KLA's expertise in process control and inspection tools is translating into market share gains. CEO Rick Wallace's assertion that the company is on pace for "solid relative revenue growth compared to our industry in calendar 2025" further reinforces this narrative, as reported by The Globe and Mail.

Valuing Growth in a High-Multiple Sector

KLA's financials underscore its operational strength. The company achieved a 43% operating margin in Q3 2025, up from 39.4% in the prior year, and maintained a 48.2% adjusted EBITDA margin, as noted by The Globe and Mail. These metrics, combined with a 16.1% five-year annualized revenue growth rate, position KLA as a cash-generative, high-margin player in a capital-intensive industry.

However, valuing KLA requires navigating the inherent risks of high-multiple tech stocks. The semiconductor equipment sector trades at an average price-to-sales (P/S) ratio of 5.2x, while KLA's P/S stands at 6.8x, reflecting investor optimism about its AI-driven growth, according to IndexBox. This premium is justified if the company can sustain its outperformance. With AI and data center infrastructure projected to drive $697 billion in global chip sales by 2025, the Deloitte outlook positions KLA's focus on advanced packaging-critical for next-gen AI chips-to capture a disproportionate share of this growth.

Sustainability of Growth: A Long-Term Play

The sustainability of KLA's Advanced Packaging growth hinges on two factors: technological leadership and demand durability. KLA's dominance in process control tools-used to inspect and measure nanometer-scale defects-gives it a moat in a segment where precision is non-negotiable. Meanwhile, the shift toward heterogeneous integration and chiplet-based designs (both reliant on advanced packaging) ensures long-term demand.

Industry forecasts add further confidence. Back-end equipment sales are expected to grow by 15% in 2026, marking three consecutive years of expansion, according to SEMI. KLA's Q4 2025 revenue guidance of $3.23 billion, above analyst estimates of $3.18 billion, suggests management is confident in maintaining this momentum, as reported by The Globe and Mail.

Conclusion: A Buy Signal with Caveats

KLA's Advanced Packaging segment is a microcosm of the semiconductor industry's broader AI-driven renaissance. While the lack of granular segment data introduces some uncertainty, the company's outperformance relative to industry benchmarks, coupled with its technological edge, makes a compelling case for investment. However, investors should monitor macroeconomic risks, such as a potential slowdown in AI adoption or trade policy shifts, which could temper growth. For now, KLA's combination of sustainable margins, strategic positioning, and execution excellence justifies its premium valuation-and positions it as a buy in a sector where momentum is king.