One-glance verdict
Overvalued
$60.57 our estimate vs market $185.60
Wall Street consensus: $233.77 (286.0% higher than our fair-value estimate)
206% above our estimate, beyond the bull case
Fundamentals snapshot
KLA Corporation
KLAC · NMS · Technology · Semiconductor Equipment & Materials
Current price
$185.60
52-week range
$90.67 - $307.37
Market cap
$242.50B
Balance sheet
Healthy
19.90x Strong cushion
Net debt $1.25B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
2 Risks
3 rewards · 2 risks
- Reward Revenue grew 11.7% last year.
- Reward Returns 87.5% on equity, ahead of 83% of its peers.
- Risk Stock trades 17.5% above its 5-year average P/E.
- Risk Insider ownership is only 0.1% (peer median: 0.3%).
What this company does
KLA Corporation
KLA Corporation provides the essential "eyes" for the computer chip industry, building complex machines that scan and measure chips during manufacturing to find tiny flaws. The company makes money by selling this inspection equipment to chipmakers, which helps them improve their production yield (the percentage of good, working chips they get from each batch). This quality control is vital for creating the powerful and reliable electronics that power everything from our phones to our cars.
How the company got here
KLA Corporation was started in 1975 by Ken Levy and Bob Anderson in Silicon Valley to create automated inspection systems for the semiconductor industry. A major turning point was its 1997 merger with Tencor Instruments, a leader in measurement tools, which combined two critical aspects of the chip-making process. This merger created a dominant force in process control, which is the science of making sure computer chips are made without tiny, costly defects. Over the years, KLA has grown by acquiring other companies with complementary technologies, expanding its ability to help chipmakers improve their manufacturing and profitability.
What it actually does
Think of KLA as the quality control inspector for the companies that make computer chips. Its highly advanced machines use lasers, optics, and AI to scan and measure the tiny circuits on silicon wafers (the thin slices of material that chips are built on) to find microscopic flaws that the human eye could never see. By catching these defects early, KLA helps chipmakers like TSMC and Samsung avoid wasting materials and time, which is crucial for making powerful and reliable electronics. Essentially, KLA doesn't make the chips themselves, but provides the critical tools and services that allow other companies to manufacture them effectively.
Semiconductor Process Control
This is KLA's largest and most important business, making up the vast majority of its revenue. It provides sophisticated systems that inspect and measure wafers and reticles (the blueprints for the chip's design) during the manufacturing process. Chipmakers pay KLA for these machines to help them increase their yield (the number of good chips they can produce from each wafer). As chips become more complex and circuits get smaller, the need for this kind of precise inspection becomes even more critical, making this segment the core of KLA's operations.
Specialty Semiconductor Process
This part of the company provides specialized equipment for processes beyond just inspection. It includes tools that perform etching (using chemicals to remove layers from a wafer) and deposition (adding thin films of material onto a wafer). These tools are often used for making specific types of chips, such as those for cars, power devices, and LEDs. While a smaller portion of KLA's total business, it represents an expansion into other essential steps of the chip-making process.
PCB, Display and Component Inspection
This segment, broadened by the acquisition of a company called Orbotech, takes KLA's inspection expertise beyond just silicon wafers. It provides solutions for inspecting printed circuit boards (PCBs, the green boards that connect all the components in electronic devices), flat panel displays for TVs and smartphones, and the advanced packaging that protects and connects chips. This business serves the broader electronics supply chain, representing a small but important area of diversification for the company.
What management is betting on now
KLA's leadership is heavily focused on the increasing complexity of semiconductors, especially those needed for artificial intelligence (AI) and high-performance computing. They are investing in new technologies to inspect and control the manufacturing of next-generation chips, including those with 3D structures and advanced packaging (new ways of combining multiple chips together). The company is also aiming to grow its service business, which provides ongoing support and optimization for its installed machines, creating a more stable and recurring source of revenue (income that is predictable and comes in regularly).
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2025 Q1
$934.85M
FY2025 Q2
$757.19M
FY2025 Q3
$990.02M
FY2025 Q4
$1.06B
FY2026 Q1
$1.07B
FY2026 Q2
$1.26B
FY2026 Q3
$622.26M
FY2026 Q4
$817.14M
Revenue
$3.66B
Net income
$1.36B
Diluted EPS
-22.61
Operating cash flow
$906.43M
Free cash flow
$817.14M
Fetching…
Sources
Revenue
$3.42B
Net income
$1.20B
Diluted EPS
9.12
Operating cash flow
$707.45M
Free cash flow
$622.26M
Fetching…
Sources
Revenue
$3.30B
Net income
$1.15B
Diluted EPS
8.68
Operating cash flow
$1.37B
Free cash flow
$1.26B
Fetching…
Sources
Revenue
$3.21B
Net income
$1.12B
Diluted EPS
8.47
Operating cash flow
$1.16B
Free cash flow
$1.07B
Fetching…
Sources
Revenue
$3.17B
Net income
$1.20B
Diluted EPS
9.04
Operating cash flow
$1.16B
Free cash flow
$1.06B
Fetching…
Sources
Revenue
$3.06B
Net income
$1.09B
Diluted EPS
8.16
Operating cash flow
$1.07B
Free cash flow
$990.02M
Fetching…
Sources
Revenue
$3.08B
Net income
$824.53M
Diluted EPS
6.16
Operating cash flow
$849.51M
Free cash flow
$757.19M
Fetching…
Sources
Revenue
$2.84B
Net income
$945.85M
Diluted EPS
7.01
Operating cash flow
$995.24M
Free cash flow
$934.85M
Fetching…
Sources
Is it cheap or expensive?
Fair value $60.57 vs current price $185.60
Wall Street consensus is the average analyst price target: $233.77 (286.0% higher than our fair-value estimate).
Our most-likely fair value is $60.57 a share — about 67.4% below today's price of $185.60, so the stock currently looks expensive (overvalued).
Is it drowning in debt?
Healthy
Net debt $1.2B. Interest coverage 19.9x.
Net debt
$1.25B
Interest coverage
19.90x
KLA Corporation's profit covers its interest bill about 19.9 times over.
Healthy
Worse cushion
Baseline
Better cushion
KLAC
BASELINE
KLA Corporation
Total debt $6.15B Interest coverage 19.90x This is the baseline the peer rows are being compared against.
Total debt $7.35B Interest coverage 31.49x +58% vs KLAC Carries about 1.6x more debt cushion than KLAC.
Total debt $4.12B Interest coverage 52.27x +163% vs KLAC Carries about 2.6x more debt cushion than KLAC.
Total debt $2.30B Interest coverage 95.53x +380% vs KLAC Carries about 4.8x more debt cushion than KLAC.
Total debt $100.13M Interest coverage 100.59x +405% vs KLAC Carries about 5.1x more debt cushion than KLAC.
Total debt $1.47B Interest coverage 4.33x -78% vs KLAC Carries about 4.6x less debt cushion than KLAC.
What you should know
The case for and against KLAC
3 Rewards
2 Risks
Rewards
-
Revenue grew 11.7% last year.
-
Returns 87.5% on equity, ahead of 83% of its peers.
-
Free cash flow was positive in 10/10 years.
Risks
-
Stock trades 17.5% above its 5-year average P/E.
-
Insider ownership is only 0.1% (peer median: 0.3%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
50.71x
Forward P/E
27.75x
P/B
38.21x
P/S
17.86x
EV/EBITDA
40.26x
PEG ratio
1.77x
Profitability
How much profit each dollar creates
Gross margin
61.3%
Operating margin
42.5%
Net margin
35.6%
ROE
87.5%
ROA
20.8%
Health
Liquidity and balance-sheet strength
Debt / equity
0.97x
Current ratio
2.88x
Quick ratio
1.84x
Total debt
$6.15B
Total cash
$4.90B
Growth
How the business has been compounding
Revenue TTM
$13.58B
Revenue 5Y CAGR
10.2%
EPS TTM
3.66
EPS 5Y CAGR
14.9%
Cash flow
How much cash the business throws off
Operating CF TTM
$4.14B
Free CF TTM
$3.77B
FCF margin
27.7%
Dividend
Shareholder payout
Yield
0.5%
Payout ratio
21.9%
Last ex-div date
2026-08-17