Why KLA Stock Crushed It This Week

KLA (NASDAQ: KLAC), a company that makes crucial equipment for the manufacturing of microchips, was producing some tasty gains for its shareholders this week. These are frothy times for U.S. chip companies, and by extension, KLA should do well too. Over the course of the past few days, two bullish new takes from analysts bolstered the buy case for this company in particular.

According to data compiled by S&P Global Market Intelligence, KLA's share price increased by nearly 13% over the course of the week on these tailwinds.

Components maker to the chip stars

Both of those prognosticator updates were published before the market open on Monday, helping to set the bullish tone for KLA stock in the subsequent days.

Image source: Getty Images.

The first came from Bank of America Securities' Vivek Arya, who cranked his KLA price target a full 30% higher to $1,300 per share from his previous level of $1,000. He also maintained his buy recommendation on the stock.

According to reports, Arya wrote that he's detecting signs of higher investment into dynamic random access memory (DRAM) production. On top of that, the great thirst for the advanced processors necessary to power artificial intelligence (AI) functionalities should help raise the fortunes of chipmakers generally -- and their suppliers.

Another bull maintains his buy rating

Soon after that report was disseminated, Stifel's Brian Chin pulled the lever on a more modest raise. Chin lifted his KLA price target to $1,050 from $922. Like Arya, he kept his buy recommendation on the shares intact.

Both these takes feel realistic. Broadly speaking, this is a fine time to be invested in stocks throughout the chip sector, provided they're not (yet) too expensive on their valuations.

Bank of America is an advertising partner of Motley Fool Money. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.