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KLAC · Analyze
Price: $192.12 (intraday, −5.5% today) · Market cap: $251.0B · Sector: Semiconductors (process control) Verdict: 🟡 WATCH → STAGED BUY, but not today · Conviction [7.5] (from [8.0] on 2026-07-15) ⚠️ REPORTS FQ4 FY2026 TONIGHT — after the close, 2 p.m. PT, 2026-07-28
Full cross-cutting analysis: compare-korea-memory-selloff-CVLT-SNDK-KLAC-AMKR-GLW-2026-07-28.md Prior: compare-ASML-KLAC-LRCX-2026-07-15.md — quality 9.0/10, conviction [8.0], accumulate $180–200 Note: 10-for-1 stock split effective 2026-06-11. All per-share figures post-split.
The headline development
The 7/15 analysis set an accumulate zone of $180–200 when KLAC was near $300 at 44x forward. It is now $192.12 — inside that zone, at ~37.5x forward. Of the five names screened, this is the only one that has actually walked into a previously-established buy range.
Business quality — not in question (§2)
| Metric | FY2026 (est., ending Jun'26) |
|---|---|
| Revenue | ~$13.5B (+11%) |
| Gross margin | 61% |
| Operating margin | 41.2% |
| FCF | ~$4.05B (31% FCF margin) |
| ROE | 95% |
| Share count | −4.1%/yr |
| Dividend | 0.45% yield, 22% payout |
Quarterly revenue has compounded steadily: $3.06B → $3.17B → $3.21B → $3.30B → $3.42B, with operating margin pinned at 41–42% throughout. KLA holds a majority share of semiconductor process control — the inspection/metrology toll booth every fab must pay, and process-control intensity rises with each node. Management expects process control to grow >20% in 2026, outpacing broader WFE.
Adversarial stress-test (§2.2): a well-funded rival cannot meaningfully attack this. Process control requires decades of accumulated defect-library data, fab-floor integration, and leading-edge trust; ASML doesn't compete here, and Applied/Hitachi have tried for years without displacing KLA. The moat is intact. The threat is cyclical and geographic, not competitive.
What changed since 7/15 — and why I tightened the zone
- Memory is 15–25% of KLA revenue (SK Hynix, Samsung, Micron). South Korea is 15–20% of geographic revenue. That is exactly the customer base whose equity value fell ~$290B in a day, whose ADR (SK Hynix) now trades below its $149 July IPO price, and whose marginal competitor CXMT just IPO'd raising $8.6B (+466% on debut).
- If memory capex plans get trimmed into 2027, the FY27 consensus EPS of ~$5.13 (+39% on FY26's ~$3.60) is what's at risk. The multiple isn't the fragile part — the estimate is.
- China export-control exposure remains open.
Valuation (§3)
| Metric | Value | Context |
|---|---|---|
| P/E trailing (FY26 GAAP ~$3.60) | 53x | 5-yr avg trailing 30.5x |
| P/E forward (~$5.13) | 37.5x | sector median 29.6x; KLAC 3-yr avg 33.1x |
| FCF yield | 1.6% | rich |
| Graham IV | $18.85 — not meaningful (BVPS $4.46, book destroyed by buybacks) | |
| Bogle expected return | ~11%/yr (0.45% + 15% growth − 4.1%/yr compression) | |
| Analyst target (28) | mean $234, range $150–325 |
At 30–36x FY27E $5.13 → fair value $155–185 (base ~$170). Still a premium multiple, but ~15% cheaper than 13 days ago and no longer sitting at consensus target.
Action
Do not buy today. FQ4 results land after the close tonight with September-quarter guidance. Buying a 37x-forward name hours before a print — during a sector de-rating that directly hits 15–25% of its customers — is not a risk worth taking for a long-term holder. Let the print land.
- Accumulate $165–190 (tightened from prior $180–200 — memory-capex estimate risk is materially higher than on 7/15)
- Strong buy <$160 (200-day ~$156)
- Trim $260+
- Thesis break: process-control revenue growth <10% for 2 quarters, memory customers publicly cutting 2027 capex, or FY27 EPS consensus falling below ~$4.50.
A portfolio-specific passage was removed from the public build.