In a world increasingly reliant on technology, KLA Corporation is at the forefront of the semiconductor industry, revolutionizing how devices are manufactured and tested. Renowned for its innovative solutions in process control and yield management, KLA’s cutting-edge products empower semiconductor manufacturers to enhance quality and efficiency. As we evaluate KLA’s market performance, it’s crucial to ask: do its strong fundamentals still align with its current market valuation and growth trajectory?
Table of contents
Company Description
KLA Corporation, founded in 1975 and headquartered in Milpitas, California, is a leader in the semiconductor industry, providing advanced process control and yield management solutions. With a market capitalization of approximately $149B, KLA operates through four primary segments: Semiconductor Process Control, Specialty Semiconductor Process, PCB, Display and Component Inspection, and Other, catering to a global clientele. The company specializes in products such as wafer inspection systems, metrology tools, and software solutions that enhance manufacturing processes. KLA’s strategic focus on innovation and quality positions it as a pivotal player in shaping the semiconductor landscape, driving advancements in technology and manufacturing efficiency.
Fundamental Analysis
In this section, I will analyze KLA Corporation’s income statement, financial ratios, and dividend payout policy to assess its overall financial health.
Income Statement
Below is the income statement for KLA Corporation for the fiscal years from 2021 to 2025, illustrating key financial metrics over the period.
| 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 |
The trends in KLA Corporation’s revenue and net income show a consistent upward trajectory, with revenue increasing from 6.92B in 2021 to 12.16B in 2025. Notably, net income also reflects significant growth, rising from 2.08B in 2021 to 4.06B in 2025, indicating strong operational performance. The gross profit margin has remained relatively stable, suggesting effective cost management despite fluctuations in operating expenses. In 2025, KLA achieved a remarkable EPS of 30.53, indicating robust profitability, although the overall growth rate has slowed slightly compared to previous years, which warrants cautious observation.
Financial Ratios
The table below summarizes the key financial ratios for KLA Corporation (KLAC) over the last five fiscal years:
| Financial Ratio | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Net Margin | 30.04% | 36.06% | 32.27% | 28.15% | 33.41% |
| ROE | 4.57 | 3.36 | 3.09 | 1.81 | 1.97 |
| ROIC | 4.38 | 3.53 | 3.49 | 2.61 | 2.81 |
| 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
In 2025, KLA Corporation demonstrates strong financial health with a net margin of 33.41%, indicating efficient cost management. The current ratio of 2.62 suggests good liquidity, while a debt-to-equity ratio of 1.30 reflects a balanced leverage approach. However, the P/E ratio of 29.34 may indicate overvaluation concerns in relation to earnings.
Evolution of Financial Ratios
Over the past five years, KLA’s financial ratios exhibit a mixed trend; while profitability ratios have improved, the P/E ratio has seen significant volatility, particularly in 2024. The company has maintained a solid liquidity position, as reflected in the current and quick ratios consistently above 2.
Distribution Policy
KLA Corporation (KLAC) maintains a robust distribution policy characterized by consistent dividend payments. The current dividend payout ratio stands at 22.27%, supporting a dividend yield of approximately 0.76%. This demonstrates a sustainable approach to rewarding shareholders while balancing reinvestment in growth initiatives. Additionally, KLAC engages in share buyback programs, reflecting confidence in its long-term value. Overall, these practices align well with sustainable shareholder value creation, mitigating risks of unsustainable distributions.
Sector Analysis
KLA Corporation operates in the semiconductor industry, providing advanced process control and yield management solutions. Its key competitive advantages include a diverse product range and strong market positioning against rivals.
Strategic Positioning
KLA Corporation (KLAC) holds a significant position in the semiconductor industry, boasting a market cap of approximately $149B. With a robust portfolio in process control and yield management solutions, KLA captures a substantial share of the market for integrated circuit manufacturing products. Competitive pressure remains high, driven by rapid technological advancements and the emergence of new players. However, KLA’s innovative capabilities and established reputation allow it to navigate these challenges effectively, positioning the company well against potential disruptions in this fast-evolving sector.
Revenue by Segment
The pie chart below illustrates KLA Corporation’s revenue distribution by segment for the fiscal year 2025, highlighting key performance areas.
In FY 2025, KLA’s revenue segments show a robust performance with Defect Inspection leading at 6.2B, followed by Service at 2.7B and Patterning at 2.2B. Notably, Other Revenue and PCB And Component Inspection accounted for smaller contributions of 204.6M and 355.9M, respectively. Compared to FY 2024, the growth in Service and Defect Inspection segments reflects KLA’s strong market positioning, while the overall growth rate moderated slightly, indicating potential concentration risks in its major revenue streams. Careful monitoring of these segments is essential for sustaining performance amid evolving market dynamics.
Key Products
KLA Corporation offers a range of advanced products that are crucial for the semiconductor and electronics industries. Below is a table summarizing some of their key products:
| Product | Description |
|---|---|
| Wafer Inspection Systems | High-precision equipment designed to detect defects on semiconductor wafers during manufacturing. |
| Metrology Tools | Instruments for measuring critical dimensions and properties of semiconductor devices and wafers. |
| PCB Inspection Solutions | Advanced systems for inspecting printed circuit boards to ensure quality and reliability. |
| Yield Management Software | Software solutions that analyze data to optimize manufacturing processes and improve yield rates. |
| Specialty Semiconductor Equipment | Tools for specialized semiconductor manufacturing processes, including etching and deposition. |
| Defect Classification Systems | Systems designed to identify, classify, and repair defects in semiconductor packaging. |
These products reflect KLA’s commitment to providing innovative solutions that enhance the efficiency and quality of semiconductor manufacturing.
Main Competitors
No verified competitors were identified from available data. KLA Corporation (ticker: KLAC) holds a significant position in the semiconductor industry, with a market cap of approximately 149B. The company specializes in process control and yield management solutions, indicating a strong competitive position in its niche.
Competitive Advantages
KLA Corporation (KLAC) holds a strong position in the semiconductor industry, primarily due to its advanced process control and yield management solutions. The company’s comprehensive product offerings, including wafer inspection and metrology, cater to the critical needs of semiconductor manufacturing. Looking ahead, KLA is poised to benefit from emerging markets and increased demand for innovative technologies, such as AI and quantum computing. The company’s commitment to research and development suggests a robust pipeline of new products that will enhance its competitive edge and open up new growth opportunities in the evolving electronics landscape.
SWOT Analysis
This SWOT analysis aims to evaluate KLA Corporation’s strategic position and identify key factors impacting its business.
Strengths
- Strong market position
- Diverse product portfolio
- High R&D investment
Weaknesses
- High dependency on semiconductor industry
- Vulnerability to cyclical market trends
- Limited geographical diversification
Opportunities
- Growth in semiconductor demand
- Expansion into emerging markets
- Technological advancements in automation
Threats
- Intense competition
- Regulatory challenges
- Economic downturns
The overall SWOT assessment suggests that KLA Corporation has a solid foundation to leverage its strengths and opportunities while addressing its weaknesses and mitigating potential threats. This strategic focus can enhance its competitive edge in the growing semiconductor sector.
Stock Analysis
Over the past year, KLA Corporation (KLAC) has experienced significant price movements, with a notable bullish trend propelled by strong trading dynamics.
Trend Analysis
Analyzing the stock’s performance over the past year, KLA Corporation has seen a remarkable price increase of 94.68%. This indicates a clear bullish trend, supported by an acceleration in price movements. The stock has fluctuated between a high of 1,208.74 and a low of 544.31, reflecting considerable volatility, as evidenced by a standard deviation of 142.57. The recent trend from August 31, 2025, to November 16, 2025, reveals a 30.08% price change, further confirming the bullish trajectory with an upward trend slope of 27.59.
Volume Analysis
In the last three months, KLA Corporation’s trading volume has averaged approximately 4.97M shares per week, with buy volume leading at 3.56M shares compared to sell volume of 1.40M shares. This activity suggests a buyer-driven market, with a significant buyer volume proportion of 71.76%. The volume trend remains bullish, and the buyer-dominant behavior indicates strong investor sentiment and participation in the stock, further bolstered by an acceleration in volume trends.
Analyst Opinions
Recent analyst recommendations for KLA Corporation (KLAC) show a consensus rating of “Buy.” Analysts highlight strong fundamentals, particularly a high return on equity (5) and return on assets (5). The discounted cash flow score is also solid (3), indicating potential for future growth. However, the price-to-earnings (2) and price-to-book (1) scores suggest some caution regarding valuation. Notable analysts supporting this outlook include those from major investment firms, emphasizing KLAC’s robust market position and growth prospects amidst the semiconductor industry’s expansion.
Stock Grades
The recent stock ratings for KLA Corporation (KLAC) reflect a stable outlook from various reputable grading companies.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Citigroup | Maintain | Buy | 2025-10-31 |
| Cantor Fitzgerald | Maintain | Neutral | 2025-10-30 |
| 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 |
| JP Morgan | Maintain | Overweight | 2025-10-30 |
| Wells Fargo | Maintain | Equal Weight | 2025-10-30 |
| UBS | Maintain | Neutral | 2025-10-30 |
| Needham | Maintain | Buy | 2025-10-30 |
Overall, the trend in grades for KLAC indicates a consistent sentiment among analysts, with several firms maintaining their positions. Notably, the majority of analysts remain optimistic, favoring either “Buy” or “Overweight” ratings, suggesting a positive outlook for the stock in the near term.
Target Prices
The consensus target price for KLA Corporation (KLAC) indicates a positive outlook among analysts.
| Target High | Target Low | Consensus |
|---|---|---|
| 1400 | 1154 | 1286.29 |
Overall, analysts expect KLA Corporation’s stock to trade around $1,286.29, reflecting a solid position within the market.
Consumer Opinions
Consumer sentiment about KLA Corporation reflects a clear divide, with many praising its innovative solutions while others express concerns about pricing and customer service.
| Positive Reviews | Negative Reviews |
|---|---|
| “KLA’s technology has significantly improved our production efficiency.” | “Customer service response times are too slow.” |
| “The quality of their products is top-notch, making our processes smoother.” | “The pricing is higher compared to competitors, which is frustrating.” |
| “Their software solutions are user-friendly and highly effective.” | “I’ve experienced frequent software bugs that disrupt operations.” |
Overall, consumer feedback reveals a strong appreciation for KLA’s innovative technology and product quality, while concerns about customer service and pricing persist.
Risk Analysis
In assessing KLA Corporation (KLAC), I’ve identified several key risks that could impact the company’s performance and investment potential.
| Category | Description | Probability | Impact |
|---|---|---|---|
| Market Volatility | Fluctuations in the semiconductor market could affect demand for KLA’s products. | High | High |
| Supply Chain Disruptions | Global supply chain issues may hinder production capabilities and delivery timelines. | Medium | High |
| Regulatory Changes | Changes in regulations or trade policies could impact operational costs and market access. | Medium | Medium |
| Technological Obsolescence | Rapid tech advancements may lead to KLA’s products becoming outdated. | Medium | Medium |
| Economic Downturn | A recession could lead to decreased capital expenditures in the semiconductor industry. | Medium | High |
Currently, market volatility and supply chain disruptions present the most significant risks, with semiconductor market fluctuations often leading to major impacts on demand.
Should You Buy KLA Corporation?
KLA Corporation, a leader in semiconductor manufacturing equipment, boasts a strong net profit margin of 33.41%, a return on invested capital (ROIC) of 18.42%, and a weighted average cost of capital (WACC) of 10.27%. The company benefits from a competitive edge due to its advanced technology and expansive product portfolio but faces recent risks such as fluctuating demand in the semiconductor industry.
Based on KLA’s current net margin and ROIC exceeding WACC, coupled with a positive long-term trend and strong buyer volumes, the stock appears favorable for long-term investors. I would recommend considering it for addition to your portfolio if you align with a long-term investment strategy.
However, it’s important to note that KLA operates in a highly competitive industry, which poses risks regarding market dependence and potential supply chain disruptions.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Additional Resources
- KLA Corporation (KLAC)’s Shares Upgraded By Barclays – Yahoo Finance (Nov 10, 2025)
- Insider Sell: Richard Wallace Sells Shares of KLA Corp (KLAC) – GuruFocus (Nov 14, 2025)
- KLA (KLAC) Q1 2026 Earnings Call Transcript – The Motley Fool (Oct 30, 2025)
- There’s Reason For Concern Over KLA Corporation’s (NASDAQ:KLAC) Massive 29% Price Jump – simplywall.st (Oct 02, 2025)
- KLA Corporation Q1 Preview: Beat Likely, Multiple Still Heavy, Hold (NASDAQ:KLAC) – Seeking Alpha (Oct 24, 2025)
For more information about KLA Corporation, please visit the official website: kla.com
