KLA-Tencor Shares Dip on Cautious Margin Guidance

Despite delivering quarterly results that surpassed Wall Street's expectations, KLA-Tencor's stock faced selling pressure as investors focused on the company's guarded near-term outlook. While the semiconductor equipment maker benefited from robust AI infrastructure demand and double-digit growth in its services division, concerns over projected gross margin contraction weighed heavily on market sentiment.

For its fiscal second quarter of 2026, which concluded in December, KLA reported revenue of $3.30 billion. This figure represents a year-over-year increase of 7.2%. Adjusted earnings per share (EPS) came in at $8.85, exceeding analyst forecasts. The company's performance was primarily driven by its semiconductor process control segment, which contributed $3 billion in revenue.

The market's reaction, however, was dominated by the forecast for the current spring quarter ending in March. Management projected a gross margin of approximately 61.75%, a decline from the 62.6% achieved in the prior period. Company executives cited an evolving product mix and persistent supply chain constraints as key factors behind this anticipated pressure. A significant question for investors is whether the explosive growth in KLA's Advanced Packaging business—which surged over 70% in the calendar year 2025—can provide a lasting counterbalance to these near-term profitability concerns.

Should investors sell immediately? Or is it worth buying KLA-Tencor?

Technical Indicators Signal Oversold Conditions

Following the earnings release, KLA's shares traded lower, declining 1.78% to €1,183.00. The recent sell-off has pushed the stock into technically oversold territory, with its Relative Strength Index (RSI) reading at 28.1.

Beyond the immediate margin outlook, the company's leadership expressed confidence in the broader industry cycle. They anticipate a recovery in the Wafer Fabrication Equipment (WFE) market for calendar year 2026, which could reach a total market value of around $135 billion.

Market participants are now looking ahead to March 12, 2026, when KLA will host its annual Investor Day. This event is expected to provide crucial strategic details on the company's plans to address margin challenges and further capitalize on the ongoing artificial intelligence investment boom.