KLAC vs. SNDK: Which Semiconductor Stock is a Better Buy Now?

KLA KLAC and Sandisk SNDK are both benefiting from strong AI infrastructure spending. AI infrastructure benefits KLA by increasing semiconductor manufacturing complexity and, consequently, the need for advanced process-control equipment. Sandisk is benefiting from rapidly expanding storage requirements. AI inference and agentic AI generate large amounts of data that must be stored, retrieved and served with low latency, driving demand for high-capacity NAND flash and enterprise SSDs.

So, KLAC or SNDK, which is a better buy under the current scenario?

The Case for KLA

KLA is benefiting from rising semiconductor manufacturing complexity and accelerating investments in AI infrastructure. In the fourth quarter of fiscal 2026, revenues increased 15% year over year to a record $3.66 billion, driven by strength in leading-edge foundry/logic, memory and advanced packaging. Semiconductor Process Control revenues rose 13% year over year to $3.26 billion, while PCB and Component Inspection revenues jumped 56%. 

AI infrastructure remains a major long-term catalyst for KLAC. Increasing adoption of high-bandwidth memory, EUV in DRAM, hybrid bonding and advanced packaging is raising process-control intensity because increasingly complex chips require more inspection and metrology. KLAC now expects advanced packaging process-control systems revenues to reach approximately $1.1 billion in calendar 2026, representing growth of more than 70% and almost twice the expected growth rate of the overall advanced-packaging market. Specialty Process and PCB and Component Inspection products are expected to grow more than 25% in calendar 2026.

Near-term momentum remains favorable. KLAC expects revenues of $4 billion, plus or minus $200 million, for the first quarter of fiscal 2027, with a non-GAAP gross margin of 62.5% and earnings of $1.16 per share, plus or minus 10 cents. KLAC expects second-half calendar 2026 revenues to grow approximately 20% from the first half, followed by continued sequential growth into 2027. 

However, memory-component pricing remains a margin headwind, while tariffs, trade restrictions and semiconductor capital-spending cyclicality add risks. Despite these challenges, KLAC's market leadership and exposure to multiple semiconductor technology transitions provide considerable business durability.

The Case for Sandisk

Sandisk is experiencing substantially faster growth as AI inference transforms NAND demand. In the fourth quarter of fiscal 2026, revenues surged 372% year over year and 51% sequentially to $8.97 billion, with approximately two-thirds of the sequential increase coming from higher pricing and one-third from higher volumes.

Datacenter has rapidly emerged as SNDK's most important growth engine. Fiscal 2026 Datacenter revenues surged 437% year over year to $5.15 billion, while Datacenter’s share of Sandisk’s bits increased from roughly 12% a year earlier to 38%. Sandisk has ramped BiCS 8 to the majority of bit production, supporting TLC and QLC products with better performance, density and power efficiency. The company also began revenue shipments of its QLC Stargate platform, broadening its portfolio across performance-intensive compute workloads and high-capacity AI data lakes.

SNDK's New Business Models (NBMs) also provide strong forward visibility for a historically cyclical NAND business. Sandisk has agreements with eight Datacenter and Edge customers, with a weighted-average duration exceeding four years. These agreements are expected to represent more than 50% of bits in fiscal 2027 and approximately two-thirds in fiscal 2028. Signed NBMs represent at least $93.9 billion of expected revenues at floor pricing, while remaining performance obligations would reach $91.1 billion, including agreements completed after the quarter. Customer financial guarantees total $16.5 billion.

SNDK expects first-quarter fiscal 2027 revenues between $10.3 billion and $10.8 billion, non-GAAP gross margin of 83%-85% and non-GAAP earnings in the $44-$46 per share range. Sandisk expects customer demand to continue exceeding supply, with bits remaining on allocation beyond calendar 2027. Adjusted free cash flow reached $5.04 billion, or 56% of revenues, in the fiscal fourth quarter, while Sandisk has $15.5 billion remaining under its share-repurchase authorization.

KLAC’s & SNDK’s Earnings Estimate Revision Goes North

The Zacks Consensus Estimate for KLA’s fiscal 2027 earnings is pegged at $5.43 per share, up 7.1% over the past 30 days, indicating a 44.41% increase over fiscal 2026’s reported figure.
 

The consensus mark for SNDK’s fiscal 2027 earnings has jumped 10.6% to $213.30 per share over the past 30 days. The company reported earnings of $70.88 per share in fiscal 2026.

Stock Price Performance and Valuation

KLA shares have returned 50.7% year to date, underperforming Sandisk’s appreciation of 527.1%.

Performance: KLAC vs. SNDK

Image Source: Zacks Investment Research

Valuation-wise, shares of both KLA and Sandisk are overvalued. In terms of forward 12-month price/sales, KLA shares are trading at 13.08X, higher than Sandisk’s 4.33X.

While KLA has a Value Score of D, Sandisk has a Value Score of C.

KLAC and SNDK Valuation

Image Source: Zacks Investment Research

Conclusion

SNDK appears to have the edge over KLAC right now. KLAC offers a highly attractive combination of process-control leadership, recurring service revenues, strong margins and relatively durable exposure to semiconductor capital spending. However, SNDK currently offers significantly stronger revenue and earnings momentum, substantially higher margins and free cash flow, accelerating Datacenter exposure and improving visibility through multiyear NBMs. SNDK's combination of AI-driven demand, supply constraints, pricing strength and long-term customer commitments gives it the stronger near-term growth profile and the edge over KLAC. 

Sandisk currently sports a Zacks Rank #1 (Strong Buy), while KLA currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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