KLA Stock May Still Have Room to Run

We think KLA (KLAC) stock might be a good investment candidate. Why? Because you get a strong margin, a low-debt capital structure, and strong momentum—with room to run as the stock is meaningfully below its 52-week high.

There Are Several Things In Favor Of KLAC Stock

KLAC stock can run given its good fundamentals and the fact that it is 15% below its 52-week high.

KLA’s Q2 FY2026 results showcased strength from AI infrastructure and advanced packaging demand, with sales in advanced packaging systems growing over 70% in 2025. This focus on high-value solutions and 18% year-over-year service segment growth in Q2 FY2026 sustains strong operating margins. Consistent free cash flow generation maintains a low-debt capital structure. While January 30 saw a stock dip post-guidance, KLA rebounded, demonstrating momentum from its leadership in critical semiconductor transitions, despite near-term headwinds from China export controls and DRAM component supply.

And Its Fundamentals Look Good

• Long-Term Profitability: About 35.7% operating cash flow margin and 38.9% operating margin last 3-year average.
• Strong Momentum: Currently in the top 10th percentile of stocks in terms of “trend strength”—our proprietary momentum metric.
• Revenue Growth: KLA saw revenue growth of 17.5% LTM and 7.3% for the last 3-year average, but this is not a growth story
• Room to Run: Despite its momentum, KLAC stock is trading 15% below its 52-week high.

Below is a quick comparison of KLAC fundamentals with S&P medians.

*LTM: Last Twelve Months

But Be Wary Of The Risks

While KLAC stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. KLAC took a hit of about 73% during the Dot-Com crash and roughly 75% in the Global Financial Crisis. The 2018 correction and Covid selloff brought dips around 32% and 37%, respectively. Even the recent inflation shock saw a drop of just over 40%. Sure, the company has solid fundamentals, but history shows that during market turmoil, deep pullbacks are pretty much par for the course. 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.

If you want to see more details, read Buy or Sell KLAC Stock.

KLAC Is Just One of Several Such Stocks

You could also check out:

1. Barrick Mining (B)
2. Coeur Mining (CDE)
3. Mueller Industries (MLI)

We chose these stocks using the following criteria:

1. Greater than $2 billion in market cap
2. High operating (or cash flow from operations) margins
3. No instance of very large revenue decline in the past 5 years
4. Low-debt capital structure
5. Strong momentum

A portfolio that was built starting 12/31/2016 with stocks that fulfill the criteria above would have performed as follows:

• Average 12-month forward returns of nearly 15%
• 12-month win rate (percentage of picks returning positive) of about 60%

Advisors: Move Client Assets Beyond Single Stocks

Advisors win when clients stay the course. An institutional-grade asset allocation strategy helps you reduce volatility and strengthen client relationships.

The asset allocation framework of Trefis’ Boston-based wealth management partner yielded positive returns during the 2008-09 period when the S&P lost more than 40%. For advisors, this partner offers a proven strategy that incorporates Trefis’ High Quality Portfolio to manage risk and allocate funds intelligently across sectors and asset classes.