In the fast-evolving semiconductor industry, KLA Corporation (KLAC) and Onto Innovation Inc. (ONTO) stand out as key players. Both companies focus on process control tools and yield management, yet they adopt distinct innovation strategies that cater to overlapping markets. As they vie for market share in a highly competitive landscape, understanding their strengths and weaknesses is crucial. Join me as I analyze these two companies to uncover which one presents the most compelling investment opportunity for savvy investors like you.
Table of contents
Company Overview
KLA Corporation Overview
KLA Corporation, headquartered in Milpitas, California, is a leading provider of process control and yield management solutions for the semiconductor and electronics industries. Founded in 1975, KLA designs and manufactures a comprehensive range of products, including wafer inspection systems, metrology tools, and software that enhance the manufacturing processes of integrated circuits. The company operates through four segments: Semiconductor Process Control, Specialty Semiconductor Process, PCB, Display and Component Inspection, and Other. With a market capitalization of $154.4B, KLA aims to drive innovation and efficiency in semiconductor manufacturing, supporting the growing demand for high-performance electronics.
Onto Innovation Inc. Overview
Onto Innovation Inc., established in 1940 and based in Wilmington, Massachusetts, specializes in process control tools and solutions specifically for the semiconductor industry. The company focuses on macro defect inspection, 2D/3D optical metrology, and advanced packaging solutions. Onto Innovation’s offerings include standalone systems and comprehensive software portfolios designed to optimize yield management across various applications. With a market capitalization of $7B, the company is committed to enhancing manufacturing precision and efficiency while addressing the evolving needs of semiconductor manufacturers.
Key similarities and differences
Both KLA Corporation and Onto Innovation Inc. operate within the semiconductor sector, providing essential tools and solutions for process control and yield management. However, KLA has a broader product range encompassing multiple segments, while Onto focuses more on specific inspection and metrology solutions, indicating a difference in their business models and market positioning.
Income Statement Comparison
In this section, I present a comparative analysis of the income statements of KLA Corporation (KLAC) and Onto Innovation Inc. (ONTO) for their most recent fiscal years. This will help you evaluate their financial performance side by side.
| Metric | KLA Corporation (KLAC) | Onto Innovation Inc. (ONTO) |
|---|---|---|
| Market Cap | 154.4B | 7.0B |
| Revenue | 12.2B | 1.0B |
| EBITDA | 5.3B | 249M |
| EBIT | 4.9B | 187M |
| Net Income | 4.1B | 202M |
| EPS | 30.53 | 4.09 |
| Fiscal Year | 2025 | 2024 |
Interpretation of Income Statement
KLA Corporation has demonstrated robust growth, with a revenue increase from 9.8B in 2024 to 12.2B in 2025, yielding a significant rise in net income from 2.8B to 4.1B. This indicates expanding margins, particularly in EBITDA, where it rose to 5.3B, reflecting improved operational efficiency. In contrast, Onto Innovation reported a modest revenue increase from 816M in 2023 to 987M in 2024, with net income climbing to 202M, though margins remained relatively stable. Overall, KLA’s performance shows a clear upward trajectory, while Onto Innovation’s growth is steadier but less pronounced.
Financial Ratios Comparison
The table below summarizes the most recent revenue and key financial ratios for KLA Corporation (KLAC) and Onto Innovation Inc. (ONTO). This comparison will help you assess their financial health and performance.
| Metric | KLA Corporation (KLAC) | Onto Innovation Inc. (ONTO) |
|---|---|---|
| ROE | 86.56% | 10.47% |
| ROIC | 38.11% | 8.74% |
| P/E | 29.34 | 41.76 |
| P/B | 25.39 | 4.37 |
| Current Ratio | 2.62 | 8.69 |
| Quick Ratio | 1.83 | 7.00 |
| D/E | 1.30 | 0.01 |
| Debt-to-Assets | 37.89% | 1.02% |
| Interest Coverage | 17.16 | 0 |
| Asset Turnover | 0.76 | 0.47 |
| Fixed Asset Turnover | 9.70 | 7.16 |
| Payout ratio | 22.27% | 0% |
| Dividend yield | 0.76% | 0% |
Interpretation of Financial Ratios
KLA Corporation (KLAC) shows exceptionally high returns on equity (ROE) and invested capital (ROIC), indicating strong profitability and efficient capital use. However, it also has a higher debt-to-equity ratio (D/E) than Onto, suggesting greater financial leverage. Onto Innovation (ONTO) boasts a remarkable current ratio, reflecting excellent short-term liquidity, but its return metrics are significantly lower. The lack of dividends may concern income-focused investors. Overall, KLAC appears more aggressive and profitable, while ONTO offers stability with less risk.
Dividend and Shareholder Returns
KLA Corporation (KLAC) pays a dividend, with a payout ratio of 22.3% and a dividend yield of 0.76%. Despite this, I observe a trend of increasing dividends, indicating a commitment to returning value to shareholders. The company also engages in share buybacks, which can enhance shareholder value but poses risks if pursued excessively. In contrast, Onto Innovation Inc. (ONTO) does not pay dividends, likely due to its reinvestment strategy aimed at growth. However, it also conducts share buybacks, reflecting a focus on shareholder returns. Both approaches can support long-term value creation, though careful management is essential.
Strategic Positioning
KLA Corporation (KLAC) holds a dominant position in the semiconductor industry with a market cap of 154.4B, providing a broad range of process control solutions, while Onto Innovation Inc. (ONTO) captures a niche market share, focusing on macro defect inspection and metrology tools, with a market cap of 7.0B. Both companies face competitive pressure from rapid technological advancements, necessitating continuous innovation to maintain their market positions. The threat of disruption is palpable, making ongoing investment in R&D critical for sustaining competitive advantages.
Stock Comparison
In this section, I will analyze the stock price movements of KLA Corporation (KLAC) and Onto Innovation Inc. (ONTO) over the past year, focusing on key price dynamics that highlight their performance.
Trend Analysis
KLA Corporation (KLAC) Over the past year, KLAC has experienced a remarkable price change of +115.96%, indicating a bullish trend. The stock has shown acceleration in its price movements, with notable highs reaching 1208.74 and lows of 544.31. This acceleration suggests a strong upward momentum, supported by a standard deviation of 148.89, indicating significant volatility in its price movements.
In the recent period from September 14, 2025, to November 30, 2025, the stock has seen a price increase of +21.93%, maintaining its bullish trend. The trend slope of 15.73 further supports the strong momentum, complemented by a standard deviation of 76.72, reflecting ongoing volatility.
Onto Innovation Inc. (ONTO) ONTO has also demonstrated a positive price change of +5.12% over the past year, categorizing its trend as bullish. It has maintained acceleration with highs of 233.14 and lows of 88.50, underpinned by a standard deviation of 42.33, which suggests moderate volatility.
Analyzing the recent period from September 14, 2025, to November 30, 2025, ONTO has achieved a substantial price increase of +29.0%, reinforcing its bullish trend. The trend slope of 1.45 indicates a steady upward trajectory, while the standard deviation of 9.18 signifies lower volatility compared to KLAC.
In summary, both KLAC and ONTO are experiencing bullish trends, although KLAC demonstrates a more pronounced increase and volatility in its price movements.
Analyst Opinions
Recent analyst recommendations for KLA Corporation (KLAC) and Onto Innovation Inc. (ONTO) suggest a consensus “Buy” rating for both companies. Analysts highlight KLAC’s strong return on equity (5) and assets (5), while ONTO’s solid performance metrics, particularly in return on assets (4), support their positive outlook. Notably, both companies received an overall score of 3 from analysts, indicating a stable investment opportunity. As I analyze these recommendations, I remain cautious, emphasizing the importance of risk management in any investment decision.
Stock Grades
In this section, I will provide you with the latest stock grades for KLA Corporation (KLAC) and Onto Innovation Inc. (ONTO) from reliable grading companies.
KLA Corporation Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Citigroup | maintain | Buy | 2025-10-31 |
| Goldman Sachs | maintain | Neutral | 2025-10-30 |
| TD Cowen | maintain | Hold | 2025-10-30 |
| Needham | maintain | Buy | 2025-10-30 |
| UBS | maintain | Neutral | 2025-10-30 |
| Wells Fargo | maintain | Equal Weight | 2025-10-30 |
| JP Morgan | maintain | Overweight | 2025-10-30 |
| Cantor Fitzgerald | maintain | Neutral | 2025-10-30 |
| Barclays | maintain | Overweight | 2025-10-30 |
| Evercore ISI Group | maintain | Outperform | 2025-10-30 |
Onto Innovation Inc. Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| B. Riley Securities | maintain | Buy | 2025-11-18 |
| Needham | maintain | Buy | 2025-11-18 |
| Evercore ISI Group | maintain | Outperform | 2025-11-05 |
| Oppenheimer | maintain | Outperform | 2025-10-14 |
| Stifel | maintain | Hold | 2025-10-13 |
| B. Riley Securities | maintain | Buy | 2025-10-10 |
| Jefferies | upgrade | Buy | 2025-09-23 |
| B. Riley Securities | maintain | Buy | 2025-08-08 |
| Benchmark | maintain | Buy | 2025-08-08 |
| Cantor Fitzgerald | maintain | Neutral | 2025-06-24 |
Overall, both KLA Corporation and Onto Innovation Inc. have received a mix of “Buy” and “Hold” ratings, showcasing a generally positive sentiment among analysts. Notably, Onto Innovation has seen some upgrades, indicating growing confidence in its performance.
Target Prices
The consensus target prices for KLA Corporation (KLAC) and Onto Innovation Inc. (ONTO) indicate positive expectations from analysts.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| KLA Corporation | 1400 | 1154 | 1286.29 |
| Onto Innovation Inc. | 180 | 120 | 153.33 |
For KLA Corporation, the current stock price of 1175.47 is below the consensus target of 1286.29, suggesting potential upside. Similarly, Onto Innovation’s stock price of 143.16 is also below its consensus target of 153.33, indicating room for growth.
Strengths and Weaknesses
The following table outlines the strengths and weaknesses of KLA Corporation and Onto Innovation Inc., two significant players in the semiconductor industry.
| Criterion | KLA Corporation | Onto Innovation Inc. |
|---|---|---|
| Diversification | High | Moderate |
| Profitability | Strong (33.4%) | Moderate (20.4%) |
| Innovation | High | Moderate |
| Global presence | Extensive | Growing |
| Market Share | Leading | Emerging |
| Debt level | Manageable | Low |
Key takeaways from this analysis indicate that KLA Corporation holds a significant advantage in profitability and market share, while Onto Innovation Inc. benefits from a low debt level and is increasing its global presence.
Risk Analysis
In the table below, I provide a summary of potential risks associated with KLA Corporation (KLAC) and Onto Innovation Inc. (ONTO), two prominent players in the semiconductor industry.
| Metric | KLA Corporation | Onto Innovation Inc. |
|---|---|---|
| Market Risk | High | Medium |
| Regulatory Risk | Medium | Low |
| Operational Risk | Medium | Medium |
| Environmental Risk | Low | Low |
| Geopolitical Risk | Medium | Medium |
Both companies face significant market risk due to the volatility in semiconductor demand and technological advancements. Recent supply chain disruptions and regulatory changes further exacerbate these risks, necessitating vigilant risk management strategies.
Which one to choose?
When comparing KLA Corporation (KLAC) and Onto Innovation Inc. (ONTO), KLAC shows stronger fundamentals with a higher net profit margin of 33.41% versus ONTO’s 20.43%. KLAC also has a robust return on equity (ROE) of 86.56% compared to ONTO’s 10.47%, indicating more efficient management of shareholders’ equity. Additionally, KLA’s stock trend has been bullish with a significant price increase of 115.96% over the past year, while ONTO’s growth stands at 5.12%. Analysts rate both stocks as “B,” but KLAC has a slightly better overall score.
Investors focused on growth may prefer KLA Corporation for its stronger financials and market performance, while those seeking a more stable option with less volatility might consider Onto Innovation. However, both companies face risks related to competition and market dependence.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Go further
I encourage you to read the complete analyses of KLA Corporation and Onto Innovation Inc. to enhance your investment decisions:
