KLA (KLAC)
Market Price (4/25/2026): $1936.0 | Market Cap: $254.2 BilSector: Information Technology | Industry: Semiconductor Materials & Equipment
KLA (KLAC)
Market Price (4/25/2026): $1936.0Market Cap: $254.2 BilSector: Information TechnologyIndustry: Semiconductor Materials & Equipment
Investment Highlights Why It Matters Detailed financial logic regarding cash flow yields vs trend-riding momentum.
Attractive operating marginsOp Mgn LTMOperating Margin = Operating Income / Revenue Reflects profitability before taxes and before impact of capital structure (interest payments). is 42% Attractive cash flow generationCFO/Rev LTMCash Flow from Operations / Revenue (Sales), Last Twelve Months (LTM) is 37%, FCF/Rev LTMFree Cash Flow / Revenue (Sales), Last Twelve Months (LTM) is 34%, CFO LTM is 4.8 Bil, FCF LTM is 4.4 Bil Stock buyback supportStock Buyback 3Y Total is 5.8 Bil Low stock price volatilityVol 12M is 45% Megatrend and thematic driversMegatrends include Artificial Intelligence, Automation & Robotics, Advanced Materials, and 5G & Advanced Connectivity. Show more. | Trading close to highsDist 52W High is 0.0%, Dist 3Y High is 0.0% | Expensive valuation multiplesP/CFOPrice/(Cash Flow from Operations). CFO is cash before capital expenditures. is 53x Stock price has recently run up significantly12M Rtn12 month market price return is 183% Valuation getting more expensiveP/S 6M Chg %Price/Sales change over 6 months. Declining P/S indicates valuation has become less expensive. is 76% Key risksKLAC key risks include [1] its substantial revenue from China being threatened by U.S. Show more. |
| Attractive operating marginsOp Mgn LTMOperating Margin = Operating Income / Revenue Reflects profitability before taxes and before impact of capital structure (interest payments). is 42% |
| Attractive cash flow generationCFO/Rev LTMCash Flow from Operations / Revenue (Sales), Last Twelve Months (LTM) is 37%, FCF/Rev LTMFree Cash Flow / Revenue (Sales), Last Twelve Months (LTM) is 34%, CFO LTM is 4.8 Bil, FCF LTM is 4.4 Bil |
| Stock buyback supportStock Buyback 3Y Total is 5.8 Bil |
| Low stock price volatilityVol 12M is 45% |
| Megatrend and thematic driversMegatrends include Artificial Intelligence, Automation & Robotics, Advanced Materials, and 5G & Advanced Connectivity. Show more. |
| Trading close to highsDist 52W High is 0.0%, Dist 3Y High is 0.0% |
| Expensive valuation multiplesP/CFOPrice/(Cash Flow from Operations). CFO is cash before capital expenditures. is 53x |
| Stock price has recently run up significantly12M Rtn12 month market price return is 183% |
| Valuation getting more expensiveP/S 6M Chg %Price/Sales change over 6 months. Declining P/S indicates valuation has become less expensive. is 76% |
| Key risksKLAC key risks include [1] its substantial revenue from China being threatened by U.S. Show more. |
Qualitative Assessment
AI Analysis | Feedback
1. Robust Semiconductor Industry Expansion Fueled by AI-Driven Demand.
The semiconductor industry has experienced a significant upswing, largely propelled by the booming demand for Artificial Intelligence (AI) infrastructure. Global semiconductor revenues are projected to reach an all-time high of approximately $1.3 trillion in 2026, representing over 60% growth from 2025. This positive outlook is widely shared, with 93% of industry leaders expecting revenue growth in 2026, and over half anticipating their company's revenue to grow by 11% or more. The Wafer Fab Equipment (WFE) market, critical for KLA, is expected to grow to between $135 billion and $140 billion in calendar year 2026, an increase of about 11% year-over-year, with similar or higher growth anticipated in 2027. This broad market strength, driven by AI and data centers, creates a strong tailwind for KLA's specialized equipment and services. The de-escalation of geopolitical tensions, such as the U.S.-Iran conflict, also positively impacted the semiconductor sector by easing supply chain concerns for critical chip fabrication materials.
2. Strong Financial Performance and Optimistic Future Guidance.
KLA consistently exceeded financial expectations, contributing significantly to its stock appreciation. In its Q2 Fiscal Year 2026 earnings, reported on January 29, 2026, KLA announced revenue of $3.30 billion, surpassing analyst estimates of $3.25 billion, and an EPS of $8.85, beating the consensus of $8.80. The company has maintained a positive outlook, reaffirming its Q3 Fiscal Year 2026 revenue guidance of approximately $3.35 billion. Analysts, in turn, predict KLA's Q3 2026 EPS to be $9.16 and revenue to be $3.3674 billion, indicating year-over-year growth of 8.92% and 10.49%, respectively. Furthermore, KLA's management outlined ambitious 2030 targets at its Investor Day on March 12, 2026, projecting revenues of around $26 billion and an EPS of $84, reflecting confidence in its long-term market position and growth strategies.
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Stock Movement Drivers
Fundamental Drivers
The 59.5% change in KLAC stock from 12/31/2025 to 4/24/2026 was primarily driven by a 47.7% change in the company's P/E Multiple.| (LTM values as of) | 12312025 | 4242026 | Change |
|---|---|---|---|
| Stock Price ($) | 1213.50 | 1935.00 | 59.5% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 12,524 | 12,745 | 1.8% |
| Net Income Margin (%) | 33.8% | 35.8% | 5.7% |
| P/E Multiple | 37.7 | 55.7 | 47.7% |
| Shares Outstanding (Mil) | 132 | 131 | 0.4% |
| Cumulative Contribution | 59.5% |
Market Drivers
12/31/2025 to 4/24/2026| Return | Correlation | |
|---|---|---|
| KLAC | 59.5% | |
| Market (SPY) | 4.2% | 61.0% |
| Sector (XLK) | 11.3% | 67.2% |
Fundamental Drivers
The 79.9% change in KLAC stock from 9/30/2025 to 4/24/2026 was primarily driven by a 59.4% change in the company's P/E Multiple.| (LTM values as of) | 9302025 | 4242026 | Change |
|---|---|---|---|
| Stock Price ($) | 1075.40 | 1935.00 | 79.9% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 12,156 | 12,745 | 4.8% |
| Net Income Margin (%) | 33.4% | 35.8% | 7.0% |
| P/E Multiple | 35.0 | 55.7 | 59.4% |
| Shares Outstanding (Mil) | 132 | 131 | 0.6% |
| Cumulative Contribution | 79.9% |
Market Drivers
9/30/2025 to 4/24/2026| Return | Correlation | |
|---|---|---|
| KLAC | 79.9% | |
| Market (SPY) | 7.0% | 64.9% |
| Sector (XLK) | 13.9% | 70.0% |
Fundamental Drivers
The 186.8% change in KLAC stock from 3/31/2025 to 4/24/2026 was primarily driven by a 98.8% change in the company's P/E Multiple.| (LTM values as of) | 3312025 | 4242026 | Change |
|---|---|---|---|
| Stock Price ($) | 674.68 | 1935.00 | 186.8% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 10,847 | 12,745 | 17.5% |
| Net Income Margin (%) | 29.6% | 35.8% | 20.9% |
| P/E Multiple | 28.0 | 55.7 | 98.8% |
| Shares Outstanding (Mil) | 133 | 131 | 1.6% |
| Cumulative Contribution | 186.8% |
Market Drivers
3/31/2025 to 4/24/2026| Return | Correlation | |
|---|---|---|
| KLAC | 186.8% | |
| Market (SPY) | 28.1% | 69.6% |
| Sector (XLK) | 55.9% | 76.0% |
Fundamental Drivers
The 398.3% change in KLAC stock from 3/31/2023 to 4/24/2026 was primarily driven by a 259.6% change in the company's P/E Multiple.| (LTM values as of) | 3312023 | 4242026 | Change |
|---|---|---|---|
| Stock Price ($) | 388.34 | 1935.00 | 398.3% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 10,484 | 12,745 | 21.6% |
| Net Income Margin (%) | 33.8% | 35.8% | 5.9% |
| P/E Multiple | 15.5 | 55.7 | 259.6% |
| Shares Outstanding (Mil) | 141 | 131 | 7.6% |
| Cumulative Contribution | 398.3% |
Market Drivers
3/31/2023 to 4/24/2026| Return | Correlation | |
|---|---|---|
| KLAC | 398.3% | |
| Market (SPY) | 79.8% | 67.5% |
| Sector (XLK) | 116.4% | 76.7% |
Price Returns Compared
| 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | Total [1] | |
|---|---|---|---|---|---|---|---|
| Returns | |||||||
| KLAC Return | 68% | -11% | 56% | 9% | 94% | 50% | 641% |
| Peers Return | 66% | -39% | 74% | -2% | 51% | 69% | 340% |
| S&P 500 Return | 27% | -19% | 24% | 23% | 16% | 4% | 89% |
Monthly Win Rates [3] | |||||||
| KLAC Win Rate | 75% | 42% | 67% | 42% | 58% | 75% | |
| Peers Win Rate | 68% | 33% | 65% | 48% | 62% | 75% | |
| S&P 500 Win Rate | 75% | 42% | 67% | 75% | 67% | 50% | |
Max Drawdowns [4] | |||||||
| KLAC Max Drawdown | 0% | -38% | -5% | -6% | -8% | 0% | |
| Peers Max Drawdown | -1% | -50% | -6% | -10% | -33% | -0% | |
| S&P 500 Max Drawdown | -1% | -25% | -1% | -2% | -15% | -7% | |
[1] Cumulative total returns since the beginning of 2021
[2] Peers: AMAT, LRCX, ONTO, VECO, MKSI. See KLAC Returns vs. Peers.
[3] Win Rate = % of calendar months in which monthly returns were positive
[4] Max drawdown represents maximum peak-to-trough decline within a year
[5] 2026 data is for the year up to 4/24/2026 (YTD)
How Low Can It Go
| Event | KLAC | S&P 500 |
|---|---|---|
| 2022 Inflation Shock | ||
| % Loss | -40.8% | -25.4% |
| % Gain to Breakeven | 69.1% | 34.1% |
| Time to Breakeven | 221 days | 464 days |
| 2020 Covid Pandemic | ||
| % Loss | -37.5% | -33.9% |
| % Gain to Breakeven | 60.1% | 51.3% |
| Time to Breakeven | 75 days | 148 days |
| 2018 Correction | ||
| % Loss | -33.6% | -19.8% |
| % Gain to Breakeven | 50.7% | 24.7% |
| Time to Breakeven | 87 days | 120 days |
| 2008 Global Financial Crisis | ||
| % Loss | -75.6% | -56.8% |
| % Gain to Breakeven | 309.8% | 131.3% |
| Time to Breakeven | 1,790 days | 1,480 days |
Compare to AMAT, LRCX, ONTO, VECO, MKSI
In The Past
KLA's stock fell -40.8% during the 2022 Inflation Shock from a high on 1/14/2022. A -40.8% loss requires a 69.1% gain to breakeven.
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About KLA (KLAC)
AI Analysis | Feedback
KLA is like the ASML of quality control and yield management for the semiconductor industry, providing the essential inspection and metrology tools that ensure chips are made perfectly.
KLA is like GE Healthcare for semiconductor factories, but instead of diagnosing human health, they provide the advanced diagnostic and inspection systems that ensure the quality and efficiency of chip manufacturing.
KLA is like Palantir for chip factories, but instead of analyzing intelligence data for governments, they analyze manufacturing data to find defects, optimize processes, and improve the yield of complex semiconductors.
AI Analysis | Feedback
- Defect Inspection and Review Systems: Systems designed to identify and analyze defects on semiconductor wafers and chips.
- Metrology Solutions: Tools providing precise measurements of critical dimensions and features during semiconductor manufacturing.
- In Situ Process Monitoring Products: Systems that offer real-time monitoring of manufacturing processes within the production environment.
- Computational Lithography Software: Software used to optimize the lithography process for creating patterns on wafers.
- Data Analytics Systems: Solutions that process and analyze manufacturing data to enhance yield and process control across semiconductor fabrication.
- Wafer Processing Systems: Equipment utilized for various stages of semiconductor wafer fabrication, including advanced packaging.
- Die Sorting and Inspection Systems: Solutions for inspecting and accurately sorting individual semiconductor dies.
- IC Component Inspection and Metrology Systems: Systems for inspecting and measuring integrated circuit components at various stages.
- Reticle Inspection Systems: Specialized systems for inspecting photomasks, known as reticles, used in semiconductor lithography.
- Support and Other Services: Comprehensive services including installation, maintenance, training, and technical support for their product lines.
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Major Customers of KLA Corporation (KLAC)
KLA Corporation primarily sells its process control and yield management solutions to other companies within the semiconductor and related nanoelectronics industries, rather than to individuals. While KLA does not publicly disclose the names of individual major customers due to the competitive nature of the industry and the fact that no single customer accounts for more than 10% of its total revenues, its customer base consists of leading companies across key segments of the semiconductor supply chain. The major categories of companies that purchase KLA's products and services include:-
Integrated Device Manufacturers (IDMs): These are companies that design, manufacture, and sell their own integrated circuits.
- Examples: Intel Corporation (NASDAQ: INTC), Micron Technology, Inc. (NASDAQ: MU), Texas Instruments Incorporated (NASDAQ: TXN)
-
Foundries: Companies that specialize in manufacturing integrated circuits for other fabless semiconductor companies.
- Examples: Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM), GlobalFoundries Inc. (NASDAQ: GFS), United Microelectronics Corporation (NYSE: UMC)
-
Outsourced Semiconductor Assembly and Test (OSAT) Companies: Firms that provide packaging and testing services for semiconductors manufactured by other companies.
- Examples: ASE Technology Holding Co., Ltd. (NYSE: ASX), Amkor Technology, Inc. (NASDAQ: AMKR)
- Mask Shops: Companies that produce photomasks, which are critical components used in the photolithography process for manufacturing integrated circuits. These are often divisions of major foundries/IDMs or specialized independent entities.
- Manufacturers in Related Nanoelectronics Industries: This broader category includes companies involved in the production of compound semiconductors, power devices, light-emitting diodes (LEDs), microelectromechanical systems (MEMS), data storage media/heads, and other advanced electronic components.
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Rick Wallace, President and Chief Executive Officer
Rick Wallace joined KLA Instruments in 1988 as an applications engineer and has held various general management positions throughout his tenure, becoming CEO in 2006. His prior experience includes positions at Procter & Gamble and Cypress Semiconductor. Mr. Wallace has served on the Board of Directors for companies such as Marvell Technology, Splunk, Proofpoint, NetApp, SEMI, and Beckman Coulter. He once led the initiative to start a new business within KLA.
Bren Higgins, Executive Vice President and Chief Financial Officer
Bren Higgins joined KLA in 1999 and has held numerous roles within the company, including multiple division controller assignments, group controller for KLA's largest business group, senior director of financial planning and analysis, and Vice President of corporate finance. He is responsible for KLA's worldwide finance and accounting, global manufacturing, logistics and supply chain operations, business development (including mergers and acquisitions), workplace services, IT, and investor relations.
Ahmad Khan, President, Semiconductor Products and Customers
Ahmad Khan joined KLA in 2004 (or 2003) in business development and has since moved into management roles for multiple product divisions. This includes serving as general manager of the Optical Films Metrology division and Group Vice President for the Patterning Division. Before joining KLA, Mr. Khan spent nine years at Applied Materials in various project engineering and management positions.
Ben Tsai, Chief Technical Officer and Executive Vice President, Corporate Alliances
Ben Tsai has over 35 years of experience at KLA, having held a wide range of technology and leadership roles, including Vice President and general manager of the wafer inspection division. He was named Chief Technology Officer in 1994. Prior to his current role, he served as Senior Vice President of technology at Tokyo Electron Limited. Mr. Tsai holds approximately 50 patents in inspection and metrology.
John Van Camp, Executive Vice President and Chief Human Resources Officer
Before joining KLA, John Van Camp held a variety of leadership positions in human resources. His previous roles include manager at General Electric and Vice President of Human Resources at Gap Inc.
AI Analysis | Feedback
The key risks to KLA Corporation (KLAC) are:-
Geopolitical Risks and Export Controls
KLA Corporation faces significant geopolitical risks, particularly from evolving U.S. government export controls and trade tensions. These include regulations from the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce, which can disrupt KLA's business and limit its access to certain markets, especially China. Trade disputes, tariffs, and potential retaliatory tariffs from other countries could increase production costs, disrupt supply chains, and negatively impact demand for KLA's products, leading to order cancellations and financial losses.
-
Supply Chain Disruptions and Dependence on Limited Suppliers
The company is vulnerable to supply chain disruptions, including shortages of raw materials or components. KLA has faced challenges in managing its supply chain, and for certain critical parts, it relies on a single supplier or a limited group of suppliers. Such dependencies can lead to delays in product delivery, impact customer satisfaction, and disrupt KLA's production processes, affecting revenues.
-
Intense Competition and Cyclicality of the Semiconductor Industry
The semiconductor equipment market is highly competitive, with several well-established players. This intense competition can exert pressure on KLA's market share and profit margins. Additionally, the semiconductor industry is cyclical, meaning that fluctuations in capital spending on semiconductor equipment can introduce uncertainty and variability in demand for KLA's products and services.
AI Analysis | Feedback
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KLA Corporation (KLAC) operates in several significant addressable markets related to semiconductor manufacturing process control and yield management.
Semiconductor Process Control Equipment Market
The global market for semiconductor process control equipment, a primary area for KLA, was valued at approximately USD 10.34 billion in 2024 and is projected to grow to USD 16.60 billion by 2032, exhibiting a Compound Annual Growth Rate (CAGR) of 6.10%. Other estimates for this market include USD 7.58 billion in 2024, projected to reach USD 13.05 billion by 2032 with a CAGR of 7.03%, and USD 8.57 billion in 2025, expected to reach USD 12.93 billion by 2032 with a CAGR of 6.05%. In the U.S. specifically, the semiconductor process control equipment market was valued at USD 1.32 billion in 2024 and is projected to reach USD 2.30 billion by 2032, with a CAGR of 7.21%. KLA holds a leading market share of around 56% in process control.
Semiconductor Metrology and Inspection Equipment Market
This market, which includes defect inspection and review systems and metrology solutions crucial to KLA's offerings, had a global market size estimated between USD 8.98 billion and USD 9.8 billion in 2024, with projections to grow to between USD 16.21 billion by 2033 and USD 18.7 billion by 2034 at a CAGR of 6.9%. In 2025, the global market size is estimated between USD 13.03 billion and USD 14.92 billion, with projections to reach between USD 16.95 billion by 2030 and USD 27.56 billion by 2034. The U.S. market for semiconductor metrology and inspection was valued at over USD 2.6 billion in 2024.
Wafer Inspection Equipment Market
For wafer inspection equipment, a core product area for KLA, the global market size was estimated at USD 5.72 billion in 2024, is estimated to reach USD 6.23 billion in 2025, and is expected to grow to USD 9.22 billion by 2030, at a CAGR of 8.15% during the forecast period (2025-2030). Another source estimates the global market at USD 4.9 billion in 2025, projected to reach USD 13.3 billion by 2035 with a CAGR of 10.6%.
Semiconductor Defect Inspection Equipment Market
The global semiconductor defect inspection equipment market was valued at USD 6.14 billion in 2025 and is projected to grow from USD 6.59 billion in 2026 to USD 13.41 billion by 2034, exhibiting a CAGR of 9.03%.
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Expected Drivers of Future Revenue Growth for KLA Corporation (KLAC)
- Demand for AI Infrastructure: KLA Corporation is significantly benefiting from the increasing demand for artificial intelligence (AI) infrastructure across all major wafer fabrication equipment (WFE) growth markets. The company's management and analysts consistently highlight AI as a primary driver of outsized growth in the semiconductor industry, directly impacting KLA's revenue.
- Growth in Advanced Packaging: Advanced packaging solutions represent a substantial and rapidly growing revenue stream for KLA. The company has reported significant year-over-year growth in advanced packaging revenue for 2024 and 2025, with projections indicating continued strong momentum in the mid-to-high teens for 2026. This growth is driven by the increasing complexity of semiconductor designs and customer interest in applying front-end capabilities to packaging.
- Increasing Process Control Intensity for Advanced Logic and Smaller Nodes: As semiconductor manufacturing progresses to more advanced nodes, such as 2nm and beyond, the "process control intensity" required per wafer increases significantly. KLA's leadership in process control, inspection, and metrology solutions positions it to capitalize on this trend, as these technologies become even more critical for managing yield in complex chip fabrication processes for advanced logic and high-bandwidth memory (HBM).
- Consistent Growth of the Services Business: KLA's services business has demonstrated a track record of continuous year-over-year growth, contributing a predictable and recurring revenue stream. This segment provides ongoing maintenance, optimization, and support for KLA's extensive installed base of equipment, further enhancing customer success and securing revenue independent of the cyclical nature of equipment sales.
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Share Repurchases
- KLA's Board of Directors approved a new $7 billion share repurchase program in March 2026, adding to an existing $5 billion program announced in April 2025 which had $3.94 billion remaining as of December 31, 2025.
- The company's annual share repurchases amounted to $2.15 billion in 2025, $1.736 billion in 2024, and $1.312 billion in 2023.
- In the first quarter of fiscal 2026 (ending in September 2025), KLA repurchased $545 million worth of shares.
Capital Expenditures
- KLA Corporation is characterized by an "extremely asset-light" business model, with capital expenditures typically around 3% of revenue, which is noted as the lowest in the semiconductor equipment industry.
- The company's capital expenditures for fiscal year 2025 were $100.4 million.
- KLA outsources most of its hardware manufacturing, focusing its capital on optical system design, software development, and system integration.
Latest Trefis Analyses
| Title | Date | |
|---|---|---|
| DASHBOARDS | ||
| LRCX Beats KLA Stock on Price & Growth | 04/25/2026 | |
| The Smart Way to Own KLAC: Collect 13% Before You Even Buy | 04/17/2026 | |
| KLA Stock Rockets 18% With 7-Day Winning Streak | 04/15/2026 | |
| KLA Stock Up 6.3% in One Day, Wait For A Dip To Buy The Stock | 03/10/2026 | |
| What Is Happening With KLA Stock? | 03/07/2026 | |
| With KLA Stock Sliding, Have You Assessed The Risk? | 03/07/2026 | |
| How KLA Stock Gained 90% | 02/20/2026 | |
| KLA Stock May Have More Upside | 02/10/2026 | |
| KLA Stock (-15%): Guidance Disappoints, Sparks Profit-Taking | 01/31/2026 | |
| ARTICLES | ||
| LRCX Looks Smarter Buy Than KLA Stock | 04/25/2026 | |
| Large Cap Stocks Trading At 52-Week High | 04/24/2026 | |
| How To Earn 13% Yield While Waiting to Buy KLAC 30% Cheaper | 04/17/2026 | |
| KLA Stock 7-Day Winning Spree: Stock Climbs 18% | 04/15/2026 | |
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Trade Ideas
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| Date | Ticker | Company | Category | Trade Strategy | 6M Fwd Rtn | 12M Fwd Rtn | 12M Max DD |
|---|---|---|---|---|---|---|---|
| 03312026 | PANW | Palo Alto Networks | Insider | Insider Buys | Low D/EStrong Insider BuyingCompanies with strong insider buying in the last 1 month, positive operating income and reasonable debt / market cap | 0.0% | 0.0% | 0.0% |
| 03312026 | ALKT | Alkami Technology | Insider | Insider Buys 45DStrong Insider BuyingCompanies with multiple insider buys in the last 45 days | 0.0% | 0.0% | 0.0% |
| 03272026 | DBX | Dropbox | Dip Buy | DB | FCFY OPMDip Buy with High FCF Yield and High MarginBuying dips for companies with high FCF yield and meaningfully high operating margin | 2.6% | 2.6% | 0.0% |
| 03272026 | DLB | Dolby Laboratories | Dip Buy | DB | FCFY OPMDip Buy with High FCF Yield and High MarginBuying dips for companies with high FCF yield and meaningfully high operating margin | 3.5% | 3.5% | 0.0% |
| 03272026 | PTC | PTC | Dip Buy | DB | FCFY OPMDip Buy with High FCF Yield and High MarginBuying dips for companies with high FCF yield and meaningfully high operating margin | 3.5% | 3.5% | 0.0% |
| 11212025 | KLAC | KLA | Quality | Q | Momentum | UpsideQuality Stocks with Momentum and UpsideBuying quality stocks with strong momentum but still having room to run | 34.4% | 34.4% | 0.0% |
| 09302022 | KLAC | KLA | Dip Buy | DB | FCFY OPMDip Buy with High FCF Yield and High MarginBuying dips for companies with high FCF yield and meaningfully high operating margin | 32.8% | 53.5% | -13.0% |
Research & Analysis
Invest in Strategies
Wealth Management
Peer Comparisons
| Peers to compare with: |
Financials
| Median | |
|---|---|
| Name | |
| Mkt Price | 294.42 |
| Mkt Cap | 136.5 |
| Rev LTM | 8,337 |
| Op Inc LTM | 2,958 |
| FCF LTM | 2,437 |
| FCF 3Y Avg | 2,008 |
| CFO LTM | 2,706 |
| CFO 3Y Avg | 2,230 |
Growth & Margins
| Median | |
|---|---|
| Name | |
| Rev Chg LTM | 5.9% |
| Rev Chg 3Y Avg | 3.0% |
| Rev Chg Q | 4.1% |
| QoQ Delta Rev Chg LTM | 1.0% |
| Op Inc Chg LTM | 6.6% |
| Op Inc Chg 3Y Avg | 1.4% |
| Op Mgn LTM | 22.3% |
| Op Mgn 3Y Avg | 22.9% |
| QoQ Delta Op Mgn LTM | -0.1% |
| CFO/Rev LTM | 31.5% |
| CFO/Rev 3Y Avg | 28.2% |
| FCF/Rev LTM | 24.8% |
| FCF/Rev 3Y Avg | 23.7% |
Valuation
| Median | |
|---|---|
| Name | |
| Mkt Cap | 136.5 |
| P/S | 13.4 |
| P/Op Inc | 46.3 |
| P/EBIT | 44.9 |
| P/E | 59.9 |
| P/CFO | 45.6 |
| Total Yield | 2.0% |
| Dividend Yield | 0.3% |
| FCF Yield 3Y Avg | 3.4% |
| D/E | 0.0 |
| Net D/E | -0.0 |
Returns
| Median | |
|---|---|
| Name | |
| 1M Rtn | 20.3% |
| 3M Rtn | 29.5% |
| 6M Rtn | 80.0% |
| 12M Rtn | 181.5% |
| 3Y Rtn | 289.5% |
| 1M Excs Rtn | 11.6% |
| 3M Excs Rtn | 25.9% |
| 6M Excs Rtn | 83.0% |
| 12M Excs Rtn | 161.6% |
| 3Y Excs Rtn | 214.8% |
Comparison Analyses
Segment Financials
Revenue by Segment| $ Mil | 2025 | 2024 | 2023 | 2022 | 2021 |
|---|---|---|---|---|---|
| Semiconductor Process Control | 8,734 | 9,324 | 7,925 | 5,735 | 4,745 |
| Printed Circuit Boards (PCB) and Component Inspection | 552 | 632 | 832 | 813 | 727 |
| Specialty Semiconductor Process | 529 | 543 | 457 | 369 | 330 |
| Corporate allocations and effects of changes in foreign currency exchange rates | -3 | -3 | -2 | 1 | 0 |
| Other | 1 | 4 | |||
| Total | 9,812 | 10,496 | 9,212 | 6,919 | 5,806 |
Price Behavior
| Market Price | $1,935.00 | |
| Market Cap ($ Bil) | 254.0 | |
| First Trading Date | 03/26/1990 | |
| Distance from 52W High | 0.0% | |
| 50 Days | 200 Days | |
| DMA Price | $1,557.13 | $1,236.71 |
| DMA Trend | up | up |
| Distance from DMA | 24.3% | 56.5% |
| 3M | 1YR | |
| Volatility | 58.0% | 44.3% |
| Downside Capture | 1.12 | 1.06 |
| Upside Capture | 254.18 | 254.29 |
| Correlation (SPY) | 60.8% | 61.9% |
| 1M | 2M | 3M | 6M | 1Y | 3Y | |
|---|---|---|---|---|---|---|
| Beta | 2.48 | 2.42 | 2.73 | 2.54 | 1.79 | 1.90 |
| Up Beta | 1.18 | 3.67 | 2.20 | 1.86 | 1.65 | 1.83 |
| Down Beta | 3.52 | 1.70 | 2.10 | 2.13 | 1.62 | 1.64 |
| Up Capture | 298% | 287% | 539% | 573% | 522% | 2237% |
| Bmk +ve Days | 7 | 16 | 27 | 65 | 139 | 424 |
| Stock +ve Days | 13 | 23 | 37 | 75 | 151 | 423 |
| Down Capture | 161% | 212% | 200% | 190% | 140% | 112% |
| Bmk -ve Days | 12 | 23 | 33 | 58 | 110 | 323 |
| Stock -ve Days | 9 | 19 | 26 | 51 | 101 | 328 |
[1] Upside and downside betas calculated using positive and negative benchmark daily returns respectively
Based On 1-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with KLAC | |
|---|---|---|---|---|
| KLAC | 198.0% | 44.7% | 2.57 | - |
| Sector ETF (XLK) | 62.8% | 20.7% | 2.25 | 69.0% |
| Equity (SPY) | 34.0% | 12.6% | 2.05 | 61.6% |
| Gold (GLD) | 42.9% | 27.2% | 1.29 | 23.6% |
| Commodities (DBC) | 46.4% | 18.0% | 1.97 | 2.4% |
| Real Estate (VNQ) | 14.2% | 13.3% | 0.74 | 20.4% |
| Bitcoin (BTCUSD) | -16.6% | 42.1% | -0.32 | 32.6% |
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Based On 5-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with KLAC | |
|---|---|---|---|---|
| KLAC | 44.5% | 42.8% | 0.99 | - |
| Sector ETF (XLK) | 18.5% | 24.8% | 0.67 | 77.9% |
| Equity (SPY) | 12.7% | 17.1% | 0.58 | 70.5% |
| Gold (GLD) | 21.2% | 17.8% | 0.97 | 15.3% |
| Commodities (DBC) | 14.5% | 19.1% | 0.62 | 14.7% |
| Real Estate (VNQ) | 3.7% | 18.8% | 0.10 | 36.7% |
| Bitcoin (BTCUSD) | 7.0% | 56.3% | 0.34 | 28.2% |
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Based On 10-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with KLAC | |
|---|---|---|---|---|
| KLAC | 41.3% | 41.1% | 0.98 | - |
| Sector ETF (XLK) | 23.2% | 24.4% | 0.87 | 77.4% |
| Equity (SPY) | 14.9% | 17.9% | 0.71 | 71.1% |
| Gold (GLD) | 13.9% | 15.9% | 0.73 | 10.8% |
| Commodities (DBC) | 10.1% | 17.8% | 0.47 | 19.4% |
| Real Estate (VNQ) | 5.4% | 20.7% | 0.23 | 42.6% |
| Bitcoin (BTCUSD) | 68.3% | 66.9% | 1.07 | 20.9% |
Smart multi-asset allocation framework can stack odds in your favor. Learn How
Returns Analyses
Earnings Returns History
Expand for More| Forward Returns | |||
|---|---|---|---|
| Earnings Date | 1D Returns | 5D Returns | 21D Returns |
| 1/29/2026 | -15.2% | -21.0% | -8.8% |
| 10/29/2025 | -1.7% | -0.7% | -6.2% |
| 7/31/2025 | 0.9% | 3.8% | -0.6% |
| 4/30/2025 | -3.8% | -1.2% | 8.0% |
| 1/30/2025 | -0.6% | 2.6% | -6.7% |
| 10/30/2024 | -3.7% | -3.2% | -6.2% |
| 7/24/2024 | 0.9% | 8.9% | 5.8% |
| 4/25/2024 | 4.9% | 1.4% | 16.0% |
| ... | |||
| SUMMARY STATS | |||
| # Positive | 14 | 16 | 15 |
| # Negative | 10 | 8 | 9 |
| Median Positive | 4.0% | 4.5% | 11.9% |
| Median Negative | -3.7% | -3.2% | -6.2% |
| Max Positive | 9.0% | 15.7% | 33.9% |
| Max Negative | -15.2% | -21.0% | -11.3% |
SEC Filings
Expand for More| Report Date | Filing Date | Filing |
|---|---|---|
| 12/31/2025 | 01/30/2026 | 10-Q |
| 09/30/2025 | 10/31/2025 | 10-Q |
| 06/30/2025 | 08/08/2025 | 10-K |
| 03/31/2025 | 05/01/2025 | 10-Q |
| 12/31/2024 | 01/31/2025 | 10-Q |
| 09/30/2024 | 10/31/2024 | 10-Q |
| 06/30/2024 | 08/05/2024 | 10-K |
| 03/31/2024 | 04/26/2024 | 10-Q |
| 12/31/2023 | 01/26/2024 | 10-Q |
| 09/30/2023 | 10/27/2023 | 10-Q |
| 06/30/2023 | 08/04/2023 | 10-K |
| 03/31/2023 | 04/28/2023 | 10-Q |
| 12/31/2022 | 01/27/2023 | 10-Q |
| 09/30/2022 | 10/28/2022 | 10-Q |
| 06/30/2022 | 08/05/2022 | 10-K |
| 03/31/2022 | 04/29/2022 | 10-Q |
Recent Forward Guidance [BETA]
Latest: Q2 2026 Earnings Reported 1/29/2026
| Forward Guidance | Guidance Change | ||||||
|---|---|---|---|---|---|---|---|
| Metric | Low | Mid | High | % Chg | % Delta | Change | Prior |
| Q3 2026 Revenue | 3.20 Bil | 3.35 Bil | 3.50 Bil | 3.9% | Raised | Guidance: 3.23 Bil for Q2 2026 | |
| Q3 2026 GAAP Gross Margin | 59.62% | 60.62% | 61.62% | -0.3% | -0.2% | Lowered | Guidance: 60.8% for Q2 2026 |
| Q3 2026 Non-GAAP Gross Margin | 60.75% | 61.75% | 62.75% | -0.4% | -0.2% | Lowered | Guidance: 62.0% for Q2 2026 |
| Q3 2026 GAAP Diluted EPS | 8.07 | 8.85 | 9.63 | 4.6% | Raised | Guidance: 8.46 for Q2 2026 | |
| Q3 2026 Non-GAAP Diluted EPS | 8.3 | 9.08 | 9.86 | 4.4% | Raised | Guidance: 8.7 for Q2 2026 | |
Prior: Q1 2026 Earnings Reported 10/29/2025
| Forward Guidance | Guidance Change | ||||||
|---|---|---|---|---|---|---|---|
| Metric | Low | Mid | High | % Chg | % Delta | Change | Prior |
| Q2 2026 Revenue | 3.08 Bil | 3.23 Bil | 3.38 Bil | 2.4% | Raised | Guidance: 3.15 Bil for Q1 2026 | |
| Q2 2026 GAAP Gross Margin | 59.8% | 60.8% | 61.8% | 0.2% | 0.1% | Raised | Guidance: 60.7% for Q1 2026 |
| Q2 2026 Non-GAAP Gross Margin | 61.0% | 62.0% | 63.0% | 0 | 0 | Affirmed | Guidance: 62.0% for Q1 2026 |
| Q2 2026 GAAP Diluted EPS | 7.68 | 8.46 | 9.24 | 2.2% | Raised | Guidance: 8.28 for Q1 2026 | |
| Q2 2026 Non-GAAP Diluted EPS | 7.92 | 8.7 | 9.48 | 2.0% | Raised | Guidance: 8.53 for Q1 2026 | |
KLAC Trade Sentinel
ACCUMULATE (Score 7-8)
CONVICTION RATIONALE
KLA scores an 8, meriting an 'ACCUMULATE' rating. The company possesses a widening competitive moat in a critical, high-margin segment of the semiconductor industry. It is a direct beneficiary of the powerful, secular AI trend which provides a strong tailwind. While the valuation is not cheap, it is a valid premium for a high-quality business with an accelerating growth profile. The primary risk is a geopolitical shock, but the underlying business strength and attractive risk/reward profile make it a core holding.
STOCK ARCHETYPE
Primary: Type C (Secular Cyclical), Secondary: Type B (Quality Compounder / Stalwart)KLA is primarily a 'Secular Cyclical' as its revenue is directly tied to semiconductor capital spending cycles. However, its dominant market share (~63%), strong pricing power, and high margins (62.6% gross margin) give it the characteristics of a 'Quality Compounder', justifying the secondary archetype.
INVESTMENT THESIS
The primary driver for KLA is the market's structural shift towards AI and high-performance computing. Manufacturing these complex chips, which use new 3D architectures like Gate-All-Around (GAA) and High-Bandwidth Memory (HBM), requires a disproportionately higher number of inspection and metrology steps. This increases KLA's revenue opportunity per wafer start, allowing its growth to outpace the broader Wafer Fab Equipment (WFE) market.
- Process control spending is forecasted to grow from ~7.4% of WFE in 2025 to ~9% by 2030.
- Services revenue, a recurring and high-margin business, is growing at 18% YoY, demonstrating the value of the expanding installed base.
- Leading-edge customers (TSMC, Intel, Samsung) are increasing capex guidance for advanced nodes to meet AI-driven demand.
- Advanced Packaging revenue grew over 70% in calendar 2025, a key enabler for chiplet integration in AI hardware.
PRIMARY RISK
The most significant friction is the geopolitical risk associated with US export controls on China. China represents a material portion of revenue (26% in Q2 FY2026), and any sudden tightening or expansion of these regulations could immediately impact KLA's ability to sell new tools or, more critically, service its large installed base there.
- China accounted for approximately 26% of revenue in the most recent quarter.
- In March 2026, reports emerged that the U.S. government is drafting new, more complex export control regulations for AI chips, indicating the regulatory framework is unstable.
- The risk has a historical precedent; when initial controls were announced in October 2022, peer stocks fell over 20%.
| KPI | Threshold | Rationale |
|---|---|---|
| Semiconductor Process Control Revenue Growth | > +10% YoY | This is the core profit engine. Growth above 10% confirms the thesis that AI-driven process intensity is allowing KLA to outgrow the broader WFE market. |
| Services Revenue Growth | > +15% YoY | Sustained high-teens growth in services validates the recurring revenue thesis, reduces cyclicality, and demonstrates the strength of the installed base moat. |
| Revenue from China | Monitor for any guidance change below the 'mid to high 20%' range | This is the primary vector for the 'Anti-Alpha' risk. Any downward revision to this figure would be a leading indicator that geopolitical risks are materializing. |
AI-Driven Premium vs. Geopolitical China Risk
BULL VIEW
AI chip complexity increases process control intensity. This allows KLA's growth to outpace the WFE market, warranting a high multiple for this structural, high-margin enabler.
CORE TENSION
Bulls justify a premium valuation based on KLA's role in the AI buildout. Bears argue this multiple is fragile due to significant, unhedgeable revenue exposure to China.
PREVAILING SENTIMENT
Services revenue growth accelerated to +18% YoY, confirming the bull thesis. However, the stock plummeted -15.2% post-earnings, signaling high market sensitivity to geopolitical and competitive risks.
BEAR VIEW
A sudden tightening of US export controls could immediately impact the China revenue base (26% of total), causing a severe guidance cut and sharp multiple compression.
| Timeline | Event & Metric To Watch |
|---|---|
Late April 2026 | Q3 FY2026 Earnings Call Watch: Revenue from China guidance; must hold the 'mid to high 20%' range for calendar 2026 to contain the primary bear thesis. |
Late July 2026 | Q4 FY2026 Earnings Call Watch: Semiconductor Process Control Revenue Growth; must re-accelerate above the 9.0% YoY baseline set in Q2 to justify the premium AI-driven valuation. |
Anytime | US Dept. of Commerce (BIS) Final Rule Announcement Watch: Headline regarding tightening of semiconductor equipment export controls to China. A 'material' tightening would be a major negative catalyst. |
October 13-15, 2026 | SEMICON West 2026 Watch: Competitor product announcements, specifically from Applied Materials (AMAT), related to new inspection platforms for Gate-All-Around (GAA) transistors. |
| Date | Event | Stock Impact |
|---|---|---|
Oct 24, 2025 | Q1 FY2026 Earnings Details: Company reported quarterly results after market close. The stock reacted positively on the next trading day, suggesting results and guidance beat market expectations at the time. | Rose significantly by +2.7% $1179.30 -> $1211.52 |
Jan 15, 2026 | AI Narrative Momentum Builds Details: Stock surged on strong momentum in the AI sector ahead of earnings, possibly driven by an analyst upgrade cycle, as investors positioned for a strong report. | Surged +7.7% $1432.63 -> $1542.95 |
Jan 29, 2026 | Q2 FY2026 Earnings & Guidance Details: Beat estimates with Services Revenue up 18% YoY. However, stock plummeted as high-teens 2026 growth guidance slightly trailed competitors, suggesting potential for minor share loss. | Plummeted -15.2% $1682.52 -> $1426.08 |
Feb 5, 2026 | Persistent Insider Selling Cluster Noted Details: A pattern of consistent open-market sales from multiple executives, including the CEO and CFO, was identified. Despite this negative governance signal, the stock saw modest gains. | Modest 1.8% gain $1305.52 -> $1329.30 |
Mar 3, 2026 | Reports of New US-China Export Control Drafts Details: News emerged that the U.S. government was drafting new, more complex export controls for AI technology, heightening geopolitical risk for the sector and causing a sharp sell-off. | Plummeted -6.1% $1534.95 -> $1441.35 |
Mar 12, 2026 | KLA Investor Day Details: Company hosted its investor day to provide long-term targets and strategic updates. The market reacted negatively, with the stock falling notably on the day of the presentation. | Fell notably by -3.8% $1465.00 -> $1409.57 |
Position Sizing
4%-6%
NORMAL
Stock is in an Explosive volatility regime (3.85x S&P) with Spiking near-term fear. While fundamentals like a widening moat and high visibility are strong, the explosive volatility caps the position size.
Diversification Alternatives
MSFT
SECTORFar more diversified than KLAC, with less direct exposure to the semiconductor manufacturing cycle and the specific US-China export control risks. A more stable, lower-volatility compounder.
FICO
SECTORA high-margin data analytics business with a recurring revenue model. It is completely uncorrelated with the semiconductor cycle and geopolitical manufacturing risks affecting KLAC.
KLA is evolving from a cyclical semiconductor equipment vendor into a critical, high-margin enabler of AI and high-performance computing, with a growing, stable services business providing a resilient revenue floor.
Filter all news through the lens of AI-driven process control intensity. The key signal is whether chipmakers are increasing their spend on inspection and metrology as a percentage of their total capital expenditure.
Major foundry/logic customer (TSMC, Intel, Samsung) capex guidance increases, particularly for advanced nodes (3nm and below); news of market share gains in e-beam inspection from Applied Materials; Services revenue growth exceeding 15% YoY; Advanced Packaging revenue growth in the mid-to-high teens or higher.
Major customer capex cuts or push-outs of advanced node ramps; evidence of market share loss to Applied Materials or ASML in core optical or e-beam inspection markets; a slowdown in Services revenue growth below the 13-15% CAGR target; tightening of US export controls on China that impact KLA's ability to service its installed base there.
Broad Wafer Fab Equipment (WFE) market forecasts (KLA's growth is tied to process *intensity*, not just overall spending); quarterly fluctuations in memory vs. foundry/logic mix; single-product benchmark comparisons without market share context; short-term supply chain issues.
Repricing Catalyst
The primary catalyst is the market's recognition of KLA's indispensable role in manufacturing AI-enabling chips. Increasing transistor density and new 3D architectures (like Gate-All-Around and High-Bandwidth Memory) require significantly more inspection and metrology steps, increasing KLA's revenue per wafer start. This is driving process control spending to grow faster than the overall Wafer Fab Equipment (WFE) market, from ~7.4% of WFE in 2025 to a forecasted ~9% by 2030.
Semiconductor Process Control (Systems & Services)
$12.0B TTM (91% of Total) · 62.6% MarginWhat It Is
Optical and e-beam wafer inspection systems (e.g., Surfscan, eSL10), metrology tools for measuring critical dimensions, and reticle inspection systems.
Who Pays & How
Foundry/Logic (TSMC, Intel, Samsung) and Memory (Samsung, SK Hynix, Micron) manufacturers pay to ensure the quality and maximize the yield of their semiconductor wafers. The lock-in is extremely high as KLA's tools are deeply integrated into the manufacturing process flow, and the cost of a production error is far greater than the cost of KLA's equipment.
Competition
Specialty Semiconductor Process & Other
$1.2B TTM (9% of Total) · 53% MarginWhat It Is
Specialty semiconductor process tools (e.g., for RF, MEMS, power semiconductors) and equipment for PCB, display, and component inspection (acquired via Orbotech).
Who Pays & How
Manufacturers of specialty semiconductors, printed circuit boards (PCBs), and flat panel displays pay for yield management and quality control solutions tailored to their specific production processes.
Competition
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