KLA KLAC and Advanced Energy Industries AEIS play key roles in the AI value chain. Both companies are benefiting from higher spending on developing AI infrastructure. Per CNBC, hyperscalers like Alphabet, Meta Platforms, Amazon and Microsoft are expected to spend $700 billion on developing AI infrastructure in 2026 on a combined basis. This means strong demand for more powerful chips driving the demand for more fabs, equipment and power. While KLAC offers process control and inspection equipment for semiconductor fabs, Advanced Energy provides AC/DC, DC/DC power supplies, plasma power, and measurement systems.
KLA or AEIS, which is a better buy in the current scenario? Let us find out.
KLA is benefiting from strong demand for leading-edge logic, high-bandwidth memory and advanced packaging, which is driving top-line growth. Advanced packaging revenues are expected to grow in the mid to high-teens on a year-over-year basis in 2026. Strong investments in WFE and advanced packaging represent a strong growth opportunity for the company. Growth of advanced packaging supporting heterogeneous chip integration has become a new market for KLA, which is currently worth $11 billion and growing faster than core WFE.
KLA’s robust portfolio and its leadership in process control systems are enabling customers to manage increasing design complexity. Process control accelerates time to results by resolving process integration challenges during the fab ramp-up phase to optimize time to market for a diverse mix of semiconductor designs.
KLAC expects the core WFE market to grow in the high-single to low-double digits in 2026, reaching the low $120-billion range. The company expects the advanced packaging component of the market to grow at a similar rate to $12 billion for a total market forecast in the mid-$130-billion range.
KLA expects third-quarter fiscal 2026 revenues of $3.35 billion (+/- $150 million), reflecting a modestly weak product mix on a sequential basis. The guidance reflects rapidly escalating costs of DRAM chips used in KLA’s image processing computers that ship with its systems, thereby hurting the gross margin. Increasing lead times of its products due to supply constraints and negative tariff impacts are headwinds in the near term.
Advanced Energy’s expanding portfolio has been noteworthy. In 2025, AEIS introduced 26 products across its target markets, including semiconductor, industrial and medical applications, which is helping drive growth and expand its market presence. Advanced Energy’s expanding footprint in the industrial and medical markets is a key catalyst. The data center market offers strong growth opportunities for AEIS as hyperscalers continue to adopt its customized power solutions in a variety of AI rack applications.
Advanced Energy’s focus on developing products for next-generation semiconductor technologies, including eVoS, NavX and 800-volt products, has been a major growth driver. These innovations are expected to drive growth by addressing the needs of customers working on advanced semiconductor processes. AEIS is investing in expanding its production capacity, particularly in Thailand and Mexico, to meet growing customer demand in the data center end market. The company expects to add $2.5 billion in revenue-generating capacity by the end of 2026, which will further strengthen AEIS’s position in the market.
AEIS’s strong customer demand and growth across its target markets, including semiconductor, industrial and medical applications, are expected to benefit the company’s top-line growth. For the first quarter of 2026, Advanced Energy expects revenues of $500 million (+/- $20 million).
