KLA Corporation ($KLAC) is now down 15% after earnings due to supply chain concerns for DRAM and optics. The stock was up 30% last month in the run-up to the earnings — While the company did beat analyst estimates on both revenue and earnings, supply concerns have become near-term headwinds.

We believe this is a good entry point for long-term investors. 

Even though the company is trading at a premium (PE of 41), KLA is instrumental in building modern AI chips. As AI chips increase in complexity, the margin for error decreases – and KLA is the only company that can provide the full suite of inspection tools to ensure these chips actually work. Most KLAC products lack alternatives and hold near-monopoly positions in their sectors.

We have initiated a position in $KLAC and a few other companies that are going to benefit from the rise of Advanced Packaging: