KLAC Up 11% in One Week, Should You Buy The Stock?

We believe there is nothing to fear in KLAC stock given its overall Very Strong operating performance and financial condition. This is aligned with the stock’s High valuation because of which we think it is Fairly Priced. Here is our multi-factor assessment.

But no matter how attractive, investing in a single stock carries high risk. Trefis High Quality Portfolio and is designed to reduce stock-specific risk while giving upside exposure

Let’s get into details of each of the assessed factors but before that, for quick background: With $123 Bil in market cap, KLA provides process control and yield management solutions for semiconductor industries, including defect inspection, metrology, process monitoring, computational lithography software, and data analytics systems.

[1] Valuation Looks High

This table highlights how KLAC is valued vs broader market. For more details see: KLAC Valuation Ratios

[2] Growth Is Very Strong

• KLA has seen its top line grow at an average rate of 10.4% over the last 3 years
• Its revenues have grown 24% from $9.8 Bil to $12 Bil in the last 12 months
• Also, its quarterly revenues grew 23.6% to $3.2 Bil in the most recent quarter from $2.6 Bil a year ago.

This table highlights how KLAC is growing vs broader market. For more details see: KLAC Revenue Comparison

[3] Profitability Appears Very Strong

• KLAC last 12 month operating income was $5.0 Bil representing operating margin of 41.2%
• With cash flow margin of 33.6%, it generated nearly $4.1 Bil in operating cash flow over this period
• For the same period, KLAC generated nearly $4.1 Bil in net income, suggesting net margin of about 33.4%

This table highlights how KLAC profitability vs broader market. For more details see: KLAC Operating Income Comparison

[4] Financial Stability Looks Very Strong

• KLAC Debt was $6.1 Bil at the end of the most recent quarter, while its current Market Cap is $123 Bil. This implies Debt-to-Equity Ratio of 4.9%
• KLAC Cash (including cash equivalents) makes up $4.5 Bil of $16 Bil in total Assets. This yields a Cash-to-Assets Ratio of 28.0%

[4] Downturn Resilience Is Moderate

KLAC saw an impact slightly worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• KLAC stock fell 40.8% from a high of $445.00 on 14 January 2022 to $263.22 on 17 October 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 26 May 2023
• Since then, the stock increased to a high of $955.41 on 14 August 2025 , and currently trades at $932.63

 
2020 Covid Pandemic

• KLAC stock fell 37.5% from a high of $182.57 on 2 January 2020 to $114.02 on 20 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 3 June 2020

 
2008 Global Financial Crisis

• KLAC stock fell 75.6% from a high of $62.46 on 19 July 2007 to $15.24 on 19 November 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 14 October 2013

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read KLAC Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – S&P 500, Russell, and S&P midcap. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.