KLA is a leading supplier of process control and yield management solutions for the semiconductor and related nanoelectronics industries. KLA provides chip and wafer manufacturing products, including defect inspection and review, metrology solutions, lithography software, and other offerings. In addition, KLA provides power device, LED, micromechanical systems, and other products for the display market.

The major U.S. stock indices are broadly lower at midday. News hitting the tape includes earnings reports, many of which are from tech companies; wild actions in the markets for precious metals; and an ongoing partial government shutdown, now in its fourth day.

Will 2026 be a bullish year for stocks, especially after the big up year in 2025? Our forecasts say yes. Our 2026 target price for the S&P 500 is 7400, up about 8% from 2025 year-end. We believe the stock market will take its cues from two sources in 2026. The first is the Fed, which has been in the driver's seat for this second leg of the bull market ever since it pivoted on its rate outlook. The second will be earnings growth, which is already solid but could get a boost in 2026 from President Trump's new policies. It is at least a modest comfort that the first year of the four-year presidential cycle has historically been good for equity returns. In all, our economic, earnings, and valuation models support a forecast of a positive year for stocks. We expect to see 1) earnings grow 12%, after a 10% increase in 2025; 2) interest rates continue to trend lower as the Fed continues to ease; and 3) valuations that at least hold steady. In a certain-to-be-unpredictable investing environment, we developed key themes that we think will be important over the next 12 months. Note that some of these themes blur boundaries between sectors. That is by design. While we have specific sector recommendations (i.e., over-weight Information Technology and Financial), we also think that some factors and themes supersede industry characteristics and can drive performance for diversified groups or portfolios of stocks. Here are our Investment Themes for 2026: Theme 1: Upbeat Management Signals, Dividend Hikes; Theme 2: Upbeat Management Signals, Raising Guidance: Theme 3: U.S. Competitive Advantage, Capital Raising: Theme 4: U.S. Competitive Advantage, Capital Raising: Theme 5: Sustainable Impact Investing: Theme 6: U.S. Competitive Advantage, Aerospace and Defense: Theme 7: U.S. Competitive Advantage, Pharmaceutical R&D: Theme 8: Onshoring and Supply Chain: Theme 9: AI Growth Opportunities: Theme 10: Innovation. For this week's list, we dive into Theme 1, Upbeat Management Signals, Dividend Hikes. This is among our most important themes and is one that stretches across industries. At this stage of the economic and market cycles, we recommend that investors pay close attention to companies sending upbeat signals to the market by raising guidance and increasing dividends. We think consistent -- and accelerated -- dividend growth at a company gives three important signals to investors: 1) the company's balance sheet is strong enough to pay a dividend; 2) management is mindful of shareholder returns, which include dividends; and 3) the near-term outlook for the company is promising, even if there is an economic slowdown. We especially like companies that have grown their dividends at an average double-digit pace over the past five years. Stocks on our BUY list that meet our criteria include the following.

KLA is one of the largest semiconductor wafer fabrication equipment, or WFE, manufacturers in the world. It specializes in the market segment of semiconductor process control, wherein machines inspect semiconductor wafers during research and development and manufacturing for defects and verify precise measurements. In this section of the market, KLA holds a majority share. It also has a small exposure to the etch and deposition segments of the WFE market. It counts as top customers the largest chipmakers in the world, including TSMC and Samsung.