KLA Corporation is a driving force behind the semiconductor industry, influencing everything from the latest smartphones to cutting-edge AI applications. Renowned for its innovative process control and yield management solutions, KLA shapes the future of electronics manufacturing with unmatched precision and quality. As we analyze its current market standing and growth trajectory, one must consider whether KLA’s robust fundamentals continue to warrant its impressive market valuation and potential for future expansion.
Table of contents
Company Description
KLA Corporation, founded in 1975 and headquartered in Milpitas, California, is a leading player in the semiconductor industry, specializing in process control and yield management solutions. With a market capitalization of approximately $160B, KLA designs and manufactures a broad range of products, including wafer inspection systems, metrology tools, and software for real-time process control. The company operates across four segments: Semiconductor Process Control, Specialty Semiconductor Process, PCB Inspection, and Other, ensuring diversification in both hardware and software solutions. With a workforce of around 15,000 employees, KLA is strategically positioned to influence the semiconductor landscape through innovation and quality assurance, driving advancements in technology and manufacturing efficiency.
Fundamental Analysis
In this section, I will conduct a fundamental analysis of KLA Corporation, examining its income statement, financial ratios, and dividend payout policy.
Income Statement
The table below summarizes KLA Corporation’s income statements over the past few fiscal years, highlighting key financial metrics to assess performance and trends.
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue | 6.92B | 9.21B | 10.50B | 9.81B | 12.16B |
| Cost of Revenue | 2.77B | 3.59B | 4.22B | 3.93B | 4.58B |
| Operating Expenses | 1.66B | 1.97B | 2.28B | 2.25B | 2.33B |
| Gross Profit | 4.14B | 5.62B | 6.28B | 5.88B | 7.58B |
| EBITDA | 2.85B | 4.01B | 4.50B | 3.91B | 5.34B |
| EBIT | 2.52B | 3.65B | 4.09B | 3.50B | 4.95B |
| Interest Expense | 157M | 160M | 297M | 311M | 305M |
| Net Income | 2.08B | 3.32B | 3.39B | 2.76B | 4.06B |
| EPS | 13.49 | 22.07 | 24.28 | 20.41 | 30.53 |
| Filing Date | 2021-08-06 | 2022-08-05 | 2023-08-04 | 2024-08-05 | 2025-08-08 |
Interpretation of Income Statement
Over the five-year period, KLA Corporation has shown steady revenue growth, peaking at 12.16B in 2025, a significant increase from 6.92B in 2021. Net income also reflects this upward trend, rising to 4.06B in 2025 from 2.08B in 2021. The gross margin has remained relatively stable, with slight fluctuations, indicating effective cost management. In the most recent fiscal year, the increase in EPS to 30.53 suggests enhanced profitability, although the revenue growth rate has slowed compared to previous years. This warrants careful monitoring as market dynamics evolve.
Financial Ratios
Below is the table of financial ratios for KLA Corporation across the most recent fiscal years.
| Ratios | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Net Margin | 30.04% | 36.06% | 32.27% | 28.15% | 33.41% |
| ROE | 61.53% | 237.04% | 116.01% | 81.99% | 86.56% |
| ROIC | 26.64% | 37.65% | 34.46% | 27.23% | 38.11% |
| P/E | 24.04 | 14.46 | 19.97 | 40.57 | 29.34 |
| P/B | 14.79 | 34.27 | 23.17 | 33.26 | 25.39 |
| Current Ratio | 2.71 | 2.50 | 2.24 | 2.15 | 2.62 |
| Quick Ratio | 1.96 | 1.75 | 1.47 | 1.50 | 1.83 |
| D/E | 1.05 | 4.83 | 2.08 | 2.02 | 1.30 |
| Debt-to-Assets | 34.52% | 53.78% | 43.09% | 44.19% | 37.89% |
| Interest Coverage | 15.82 | 22.79 | 13.45 | 11.68 | 17.16 |
| Asset Turnover | 0.67 | 0.73 | 0.75 | 0.64 | 0.76 |
| Fixed Asset Turnover | 9.03 | 9.43 | 8.46 | 7.31 | 9.70 |
| Dividend Yield | 1.12% | 1.33% | 1.08% | 0.69% | 0.76% |
Interpretation of Financial Ratios
KLA Corporation’s financial ratios for FY 2025 indicate a robust liquidity position, with a current ratio of 2.62 and a quick ratio of 1.83, suggesting strong short-term financial health. The solvency ratio stands at 0.39, indicating moderate leverage, while the debt-to-equity ratio of 1.30 raises some concerns regarding long-term financial stability. Profitability ratios are strong, with a net profit margin of 33.41% and an impressive return on equity of 86.56%. However, the price-to-earnings ratio of 29.34 suggests the stock may be overvalued compared to its earnings potential. Overall, while KLA exhibits strong operational efficiency, investors should remain cautious about its high leverage and valuation metrics.
Evolution of Financial Ratios
Over the past five years, KLA Corporation has shown an upward trend in profitability ratios, with net profit margins improving from 30.04% in 2021 to 33.41% in 2025. Liquidity ratios have also remained consistently strong, reflecting stable financial health.
Distribution Policy
KLA Corporation (KLAC) maintains a dividend payout ratio of approximately 22% and has shown a consistent trend in dividend payments, with a recent yield of about 0.76%. The company also engages in share buybacks, enhancing shareholder returns. However, there are potential risks associated with unsustainable distributions if profit margins decline. Overall, KLA’s distribution strategy appears aligned with long-term value creation, supported by solid free cash flow and ongoing profitability.
Sector Analysis
KLA Corporation operates in the semiconductor industry, providing critical process control and yield management solutions, facing competition from major players while leveraging advanced technology and a strong market position.
Strategic Positioning
KLA Corporation holds a significant position within the semiconductor industry, boasting a market cap of approximately $160B. The company specializes in process control and yield management solutions, which are critical in the semiconductor manufacturing process. With competitive pressure from peers in the sector, KLA’s advanced metrology and inspection technologies give it a robust edge. However, ongoing technological disruptions require continuous innovation to maintain its market share. I remain cautious, as shifts in supply chains or emerging technologies could impact KLA’s performance and market standing.
Revenue by Segment
The chart below illustrates KLA Corporation’s revenue breakdown by segment for the fiscal year 2025, highlighting the key areas contributing to overall performance.
In FY 2025, KLA’s revenue from Defect Inspection reached 6.2B, marking it as the leading segment. Service revenue also demonstrated robust performance at 2.7B, while Patterning contributed 2.2B. Other segments, such as PCB and Component Inspection (355.9M) and Specialty Semiconductor Process (517.2M), showed growth but remained smaller in comparison. The overall trend indicates a solid revenue base, although the growth rate for segments like Defect Inspection and Service has shown signs of slowing, indicating potential margin risks as concentration in these areas increases.
Key Products
KLA Corporation offers a range of innovative products that are essential for the semiconductor and electronics industries. Below is a table detailing some of their key products:
| Product | Description |
|---|---|
| Wafer Inspection Systems | Advanced systems that detect defects and anomalies in semiconductor wafers, ensuring high quality in chip manufacturing. |
| Metrology Solutions | Tools for precise measurement and analysis of wafer characteristics, crucial for optimizing semiconductor production processes. |
| Defect Review Systems | Systems designed to capture and analyze defects on wafers, aiding in quick identification and resolution of manufacturing issues. |
| Specialty Process Control Tools | Tailored solutions for specific semiconductor processes, enhancing efficiency and yield in specialty applications. |
| PCB Inspection and Testing Systems | Equipment for inspecting printed circuit boards (PCBs) to ensure they meet quality standards, reducing the risk of faults in electronic devices. |
| Additive Manufacturing Solutions | Technologies that enable the creation of complex structures through 3D printing, optimizing the manufacturing process for electronics. |
These products illustrate KLA’s commitment to providing cutting-edge solutions that enhance efficiency and quality in semiconductor manufacturing.
Main Competitors
The competitive landscape in the semiconductor industry features several strong players, each offering unique solutions and products.
| Company | Market Cap |
|---|---|
| Applied Materials, Inc. | 213.5B |
| Lam Research Corporation | 199.3B |
| QUALCOMM Incorporated | 187.2B |
| Intel Corporation | 182.1B |
| Amphenol Corporation | 170.6B |
| Sony Group Corporation | 167.5B |
| Accenture plc | 166.6B |
| Texas Instruments Incorporated | 165.9B |
| KLA Corporation | 159.6B |
| Arm Holdings plc | 149.2B |
| Analog Devices, Inc. | 139.1B |
KLA Corporation operates within a highly competitive global semiconductor market, contending with prominent firms such as Applied Materials and Lam Research. Each competitor specializes in different aspects of semiconductor manufacturing and technology, contributing to a dynamic industry landscape.
Competitive Advantages
KLA Corporation holds a strong competitive edge in the semiconductor industry through its comprehensive suite of process control and yield management solutions. With a market cap of approximately $160B, the company leverages advanced technologies in wafer inspection and metrology that are crucial for semiconductor fabrication. Looking ahead, KLA is poised to capitalize on emerging markets, particularly in AI and quantum computing, by introducing innovative products tailored for next-generation manufacturing processes. This strategic focus on R&D positions KLA to capture significant growth opportunities while maintaining its leadership in quality assurance and defect management.
SWOT Analysis
The purpose of this analysis is to evaluate KLA Corporation’s strengths, weaknesses, opportunities, and threats to inform strategic decisions.
Strengths
- Strong market position
- Diverse product portfolio
- High R&D investment
Weaknesses
- High dependency on semiconductor industry
- Market volatility
- Significant competition
Opportunities
- Growing demand for semiconductor technology
- Expansion into emerging markets
- Increasing automation in manufacturing
Threats
- Economic downturns
- Trade regulations
- Rapid technological changes
Overall, KLA Corporation’s strengths position it well within the semiconductor industry, while the identified weaknesses suggest a need for diversification. The opportunities present significant growth potential, but the company must remain vigilant against external threats.
Stock Analysis
Over the past year, KLA Corporation (KLAC) has experienced significant price movements, reflecting a robust bullish trend with notable trading dynamics that merit attention.
Trend Analysis
In examining KLA Corporation’s stock price over the last twelve months, I observed a substantial percentage change of +116.63%. This impressive gain indicates a strong bullish trend in the stock’s performance. Notably, the stock has reached a high of 1214.46 and a low of 560.61, signaling not only a positive trajectory but also an acceleration in upward momentum. The volatility, indicated by a standard deviation of 153.03, suggests considerable price fluctuations throughout the period.
Volume Analysis
In the last three months, the total trading volume for KLAC stood at approximately 590.55M, with buyer volume at 335.97M and seller volume at 246.24M. The data indicates that trading activity has been buyer-driven, as buyers accounted for 56.89% of the total volume. Moreover, the volume trend is increasing, suggesting positive investor sentiment and heightened market participation. In the recent period, buyer dominance reached 62.88%, further reinforcing the bullish outlook for KLA Corporation.
Analyst Opinions
Recent analyst recommendations for KLA Corporation (KLAC) reveal a consensus rating of “Buy” for 2025. Analysts emphasize the company’s strong return on equity and assets, which scored 5 out of 5, indicating robust profitability. The discounted cash flow analysis also supports a positive outlook, garnering a score of 4. While the price-to-earnings and price-to-book ratios received lower scores, overall sentiment remains bullish. Notable analysts highlight KLAC’s solid fundamentals and strategic positioning in the semiconductor industry as key reasons for their recommendations.
Stock Grades
I found reliable stock grades for KLA Corporation (KLAC) from recognized grading companies. Here is the summary of the most recent ratings:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Morgan Stanley | maintain | Equal Weight | 2025-12-02 |
| Citigroup | maintain | Buy | 2025-10-31 |
| TD Cowen | maintain | Hold | 2025-10-30 |
| Barclays | maintain | Overweight | 2025-10-30 |
| Evercore ISI Group | maintain | Outperform | 2025-10-30 |
| Goldman Sachs | maintain | Neutral | 2025-10-30 |
| UBS | maintain | Neutral | 2025-10-30 |
| Cantor Fitzgerald | maintain | Neutral | 2025-10-30 |
| JP Morgan | maintain | Overweight | 2025-10-30 |
| Needham | maintain | Buy | 2025-10-30 |
Overall, the trend shows a consistent maintenance of grades across various firms, indicating a stable outlook for KLAC. Notably, firms like Citigroup and Needham continue to endorse the stock with a “Buy” rating, while several others maintain a neutral or overweight stance. This suggests a generally positive sentiment among analysts, reflecting confidence in the company’s performance.
Target Prices
The consensus target price for KLA Corporation (KLAC) reflects a strong outlook from analysts.
| Target High | Target Low | Consensus |
|---|---|---|
| 1400 | 1214 | 1294.86 |
Overall, analysts expect KLA Corporation to perform well, with a consensus target price indicating a positive expectation for the stock’s future performance.
Consumer Opinions
Consumer sentiment regarding KLA Corporation (KLAC) reflects a mix of satisfaction and areas for improvement, showcasing the company’s strengths and weaknesses from the perspective of its customers.
| Positive Reviews | Negative Reviews |
|---|---|
| Excellent product quality and reliability. | Customer service can be unresponsive. |
| Innovative technology that enhances efficiency. | High prices compared to competitors. |
| Strong performance in semiconductor manufacturing. | Limited product range for smaller firms. |
Overall, consumer feedback highlights KLA Corporation’s exceptional product quality and innovation, while noting challenges in customer service and pricing that may deter potential clients.
Risk Analysis
In this section, I will outline key risks associated with investing in KLA Corporation (KLAC) to help you make informed decisions.
| Category | Description | Probability | Impact |
|---|---|---|---|
| Market Volatility | Fluctuations in semiconductor demand affecting revenue. | High | High |
| Regulatory Changes | Potential changes in trade policies impacting operations. | Medium | High |
| Supply Chain Disruptions | Interruptions in the supply chain affecting production timelines. | Medium | Medium |
| Technological Obsolescence | Rapid technological advancements could outpace KLA’s offerings. | Medium | High |
| Currency Fluctuations | Variability in foreign exchange rates impacting profitability. | Medium | Medium |
The semiconductor sector is experiencing significant market volatility due to demand fluctuations, which could heavily impact KLA’s revenue. It’s crucial to monitor this risk closely.
Should You Buy KLA Corporation?
KLA Corporation demonstrates strong profitability with a net profit margin of 33.41% in FY 2025, reflecting effective cost management and solid revenue growth of 23.89% year-over-year. The company appears to create value as its return on invested capital (ROIC) of 38.11% exceeds the weighted average cost of capital (WACC) of 10.28%, indicating efficient use of capital. However, with a debt-to-equity ratio of 1.30, its reliance on debt may raise concerns. The overall rating of B+ suggests a solid but cautious investment outlook.
Favorable signals
KLA Corporation exhibits several favorable elements according to its financial evaluations. The company has achieved a revenue growth of 23.89% and maintains a gross margin of 62.32%. Additionally, the gross profit growth is 28.74%, and the EBIT margin stands at an impressive 40.69%. The net margin is also favorable at 33.41%, with a growth rate of 18.7%. Furthermore, the return on equity (ROE) is notable at 86.56%, and the company shows strong liquidity with a current ratio of 2.62 and a quick ratio of 1.83.
Unfavorable signals
Despite the favorable aspects, KLA Corporation does present some unfavorable signals. The company’s return on invested capital (ROIC) is 38.11%, while its weighted average cost of capital (WACC) is 10.28%. This indicates value destruction, as ROIC is greater than WACC. The price-to-earnings (PE) ratio of 29.34 and price-to-book (PB) ratio of 25.39 are both unfavorable, suggesting the stock may be overvalued. Additionally, the debt-to-equity ratio is at 1.3, which is concerning.
Conclusion
Overall, while KLA Corporation showcases strong income statement metrics and a favorable ratio evaluation, the value destruction indicated by ROIC being greater than WACC raises concerns. Given the recent seller volume surpassing buyer volume, it might be prudent to wait for buyers to return before making any investment decisions.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Additional Resources
- How Is KLA Corporation’s Stock Performance Compared to Other Semiconductor Stocks? – MSN (Dec 06, 2025)
- KLA Corporation (KLAC) Stock Is Up, What You Need To Know – Yahoo Finance (Nov 19, 2025)
- KLA (KLAC): Assessing Valuation After a Powerful Multi‑Year Rally and Recent Share Price Cooling – simplywall.st (Dec 05, 2025)
- Looking Into KLA Corp’s Recent Short Interest – Sahm (Dec 01, 2025)
- Morgan Stanley Maintains KLA Corp(KLAC.US) With Hold Rating, Raises Target Price to $1,214 – 富途牛牛 (Dec 02, 2025)
For more information about KLA Corporation, please visit the official website: kla.com
