In the dynamic landscape of the semiconductor industry, KLA Corporation (KLAC) and Onto Innovation Inc. (ONTO) stand out as key players, each with distinct strategies and innovations. Both companies focus on process control and yield management, addressing the growing demands of semiconductor manufacturing. As they operate within the same sector, comparing their market approaches and technological advancements is crucial for investors seeking promising opportunities. Join me as we explore which of these companies presents the most compelling investment case.
Table of contents
Company Overview
KLA Corporation Overview
KLA Corporation is a leading provider of process control, process-enabling, and yield management solutions primarily for the semiconductor and electronics industries. Founded in 1975 and headquartered in Milpitas, California, KLA operates through four main segments: Semiconductor Process Control, Specialty Semiconductor Process, PCB, Display and Component Inspection, and Other. The company’s comprehensive portfolio includes advanced inspection and metrology tools designed to enhance manufacturing precision, ensuring high-quality output in integrated circuit production. KLA’s innovative technologies support a wide range of applications, positioning it as a critical player in the semiconductor ecosystem with a market cap of approximately $152B.
Onto Innovation Inc. Overview
Onto Innovation Inc., established in 1940 and headquartered in Wilmington, Massachusetts, focuses on designing and manufacturing process control tools that cater to the semiconductor and advanced packaging sectors. The company specializes in macro defect inspection, 2D/3D optical metrology, and process control analytical software. Onto’s solutions are vital for manufacturers of silicon wafers and various devices, including LEDs and CMOS sensors. With a market cap of around $6.9B, Onto Innovation is committed to enhancing yield management and operational efficiency in semiconductor production.
Key similarities between KLA and Onto Innovation include their focus on the semiconductor industry and their emphasis on process control technologies. However, KLA offers a broader range of products and services, while Onto Innovation specializes more in optical metrology and packaging solutions.
Income Statement Comparison
The following table presents a comparison of the income statements for KLA Corporation and Onto Innovation Inc. for their most recent fiscal years.
| Metric | KLA Corporation (2025) | Onto Innovation Inc. (2024) |
|---|---|---|
| Revenue | 12.16B | 987.32M |
| EBITDA | 5.34B | 249.41M |
| EBIT | 4.95B | 187.10M |
| Net Income | 4.06B | 201.67M |
| EPS | 30.53 | 4.09 |
Interpretation of Income Statement
In the most recent year, KLA Corporation showed strong revenue growth, increasing from 9.81B in 2024 to 12.16B in 2025, which indicates a robust demand for its products. This growth also led to a significant rise in net income from 2.76B to 4.06B, reflecting improved operational efficiency and effective cost management. Conversely, Onto Innovation experienced a more modest revenue increase, suggesting stabilization in its growth trajectory. Despite this, the net income rose from 121.16M to 201.67M, showcasing effective margin management in a competitive environment. Overall, KLA exhibits higher growth rates and profitability compared to Onto, which may influence investment decisions.
Financial Ratios Comparison
In the following table, I present a comparative analysis of the financial ratios for KLA Corporation (KLAC) and Onto Innovation Inc. (ONTO) based on the most recent data.
| 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% | 0.72% |
| Interest Coverage | 17.16 | – |
| 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 shows impressive performance with high ROE (86.56%) and ROIC (38.11%), indicating effective management and investment returns. The relatively high P/E (29.34) suggests strong growth prospects, but the P/B ratio indicates it is priced at a premium. In contrast, Onto Innovation’s ratios, notably the low D/E (0.01) and high current (8.69) and quick ratios (7.00), show a solid liquidity position but lower returns on equity and investment, indicating a more conservative approach. The absence of dividends may concern investors looking for income.
Dividend and Shareholder Returns
KLA Corporation (KLAC) offers a dividend, with a payout ratio of 22.27% and a yield of 0.76%, indicating sustainable distributions. The company also engages in share buybacks, enhancing shareholder returns. Conversely, Onto Innovation Inc. (ONTO) does not pay dividends, focusing instead on reinvesting profits into growth and R&D, which may align with long-term value creation. While KLAC’s approach supports current shareholder returns, ONTO’s strategy could yield future gains, indicating differing paths to value.
Strategic Positioning
In the semiconductor industry, KLA Corporation (KLAC) holds a substantial market share due to its comprehensive range of process control solutions. With a market cap of 152B and robust innovation, KLAC faces competitive pressure primarily from Onto Innovation Inc. (ONTO), which offers specialized inspection and metrology tools. Both companies are navigating the technological disruptions within the sector, emphasizing the need for continuous advancement to maintain their market positions. As a result, they are well-positioned to capitalize on the growing demand for semiconductor technologies.
Stock Comparison
In the past year, KLA Corporation (KLAC) and Onto Innovation Inc. (ONTO) have both demonstrated significant price movements, reflecting their respective trading dynamics and investor sentiment.
Trend Analysis
KLA Corporation (KLAC) has experienced a remarkable price change of +112.22% over the past year, indicating a strong bullish trend. The stock has shown acceleration in its performance, with a highest price of 1208.74 and a lowest price of 544.31. The standard deviation of 148.37 suggests a notable level of volatility, which investors should consider when evaluating their positions.
In the recent period from September 14, 2025, to November 30, 2025, KLAC recorded a price change of +19.83%, maintaining its bullish trend with a trend slope of 14.95. The standard deviation during this period was 75.35, indicating continued volatility.
Onto Innovation Inc. (ONTO) has also posted a positive price change of +3.85% over the past year, confirming a bullish trend. The stock has shown acceleration, with a highest price of 233.14 and a lowest price of 88.5. The standard deviation of 42.33 indicates moderate volatility.
In the recent period from September 14, 2025, to November 30, 2025, ONTO achieved a price change of +27.44%, further supporting its bullish trend with a trend slope of 1.39. The standard deviation during this timeframe was 8.99, suggesting lower volatility compared to KLAC.
Investors should weigh the performance metrics and volatility when considering positions in KLAC and ONTO, as both companies exhibit strong upward trends with differing levels of risk.
Analyst Opinions
Recent analyst recommendations for KLA Corporation (KLAC) and Onto Innovation Inc. (ONTO) show a consensus rating of “Buy.” Analysts highlight KLAC’s solid return on equity (5) and strong return on assets (5), suggesting robust financial health. Similarly, ONTO’s performance is backed by decent scores in return on assets (4) and price-to-book (3). Both companies received an overall score of 3, indicating stable performance. Analysts believe that both stocks present good long-term growth potential despite current market volatility.
Stock Grades
In the current market landscape, stock grades provide crucial insights for informed investment decisions. Here’s a look at the latest ratings for KLA Corporation and Onto Innovation Inc.
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 maintained strong ratings, with a notable trend of consistent “Buy” recommendations from various grading companies. This suggests a positive outlook for both stocks, making them potentially attractive options for investors. However, as always, I advise careful consideration of market conditions and individual risk tolerance before making investment decisions.
Target Prices
Based on the latest reliable analyses, here are the target prices for KLA Corporation and Onto Innovation Inc.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| KLA Corporation | 1400 | 1154 | 1286.29 |
| Onto Innovation Inc. | 180 | 120 | 153.33 |
The consensus target price for KLA Corporation suggests a moderate upside potential compared to its current price of 1155.25. Meanwhile, Onto Innovation Inc. has a target consensus of 153.33, indicating a strong upside relative to its current price of 141.51.
Strengths and Weaknesses
The following table outlines the strengths and weaknesses of KLA Corporation (KLAC) and Onto Innovation Inc. (ONTO).
| Criterion | KLA Corporation (KLAC) | Onto Innovation Inc. (ONTO) |
|---|---|---|
| Diversification | Strong across multiple semiconductor segments | Focused on specific process control tools |
| Profitability | High net profit margin (33.4%) | Moderate net profit margin (20.4%) |
| Innovation | Robust R&D investment | Continuous product development |
| Global presence | Significant international operations | Established presence but less global reach |
| Market Share | Leading in the semiconductor equipment sector | Growing market share in niche markets |
| Debt level | Moderate debt levels (debt/equity ratio ~1.30) | Very low debt levels (debt/equity ratio ~0.01) |
Key takeaways indicate that while KLA Corporation showcases a strong profitability and diversified portfolio, Onto Innovation benefits from minimal debt levels, which may appeal to risk-averse investors looking for stability.
Risk Analysis
The following table highlights key risks associated with KLA Corporation and Onto Innovation Inc., focusing on metrics that may impact their business performance.
| Metric | KLA Corporation | Onto Innovation Inc. |
|---|---|---|
| Market Risk | Moderate | Moderate |
| Regulatory Risk | High | Moderate |
| Operational Risk | Low | Moderate |
| Environmental Risk | Low | Low |
| Geopolitical Risk | Moderate | High |
Both companies face significant regulatory risks, particularly in the semiconductor industry. With recent geopolitical tensions affecting supply chains, this risk could lead to operational disruptions. It’s crucial to monitor these factors when considering investments in these firms.
Which one to choose?
When comparing KLA Corporation (KLAC) and Onto Innovation Inc. (ONTO), KLAC showcases a stronger financial performance, with a net profit margin of 33.41% compared to ONTO’s 20.43%. KLAC’s robust gross profit margin of 62.32% further highlights its superior operational efficiency. Additionally, KLAC’s higher return on equity (86.56%) suggests better profitability relative to shareholders’ equity.
While both companies demonstrate bullish trends in their stock prices, KLAC has shown a more significant price increase of 112.22% over the past year. Analysts rate both companies as a “B,” indicating a generally favorable outlook. However, investors focused on growth may prefer KLAC for its higher margins and returns, while those seeking a more stable option with less volatility might consider ONTO.
Risk factors include market dependence and competition in the semiconductor industry, which may impact performance.
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:
