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KLAC trades against a final fair-value range of $735.74-$1,243.87, with the midpoint set by the accepted valuation synthesis rather than earlier draft model outputs. Fair value range: low $736, high $1244, with mid-point at $984.
Stock analysis

KLAC fair value $736–$1,244

By StockMarketAgent.AI team· supervised by
Analyzed: 2026-05-08Next update: 2026-08-08Methodology v2.5Review: automatedArchetype: Mature compounder
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Last price
$1869.19
▼ -884.78 (-47.33%)
Fair value
$984
$736–$1244
Rating
Sell
confidence 84/100
Upside
-47.3%
upside to fair value
Margin of Safety
$836.75
MoS level · 15%
Market Cap
$244.2B
P/E fwd 37.7

§1 Executive summary

  • Composite fair value $984 with high case $1,244.
  • Implied downside of 47.3% to fair value.
  • Moat 9/10 · confidence 84/100 · Mature compounder.
  • Currently screens above fair value, so patience matters more than entry speed.
Fair value
$984
Margin of safety
-89.9%
Confidence
84/100
Moat
9/10

Educational research only - not investment advice, an offer, or a trade instruction. Confirm current data and do your own due diligence before acting.

$1,869.19Price
Low $735.74
Mid $984.41
High $1,243.87

KLAC trades against a final fair-value range of $735.74-$1,243.87, with the midpoint set by the accepted valuation synthesis rather than earlier draft model outputs.

  • Dominant market share in advanced
    Dominant market share in advanced metrology and inspection.
  • High capital intensity of advanced
    High capital intensity of advanced node defect detection.
  • Bull thesis
    Value: Extreme overvaluation relative to normalized cash flows.

§2 Bear case

A synchronized downturn in global WFE spending combined with strict export bans on advanced metrology tools to China severely contracts near-term revenueRevenueRevenue is an income-statement line item used to reconcile revenue to operating profit, pre-tax income, net income, or per-share earnings. It should be compared across periods and against peer disclosure conventions.. Elevated R&D requirements for 2nm transitions crush operating leverageLeverageThe proportion of debt in the company's capital structure. Commonly measured as Debt/EBITDA, Debt/Equity, or Net Debt/EBITDA., forcing margins well below mid-cycle averages.

Ways this thesis can break

China Export Ban Expansion

· Medium

Complete restriction on all tier-1 process control equipment sales to Chinese foundries, eliminating a high-margin revenue vector.

FV impact
High
Trigger
12-24 months

WFE Cyclical Collapse

· Medium

Prolonged memory and foundry capex freeze delays 2nm and advanced packaging ramps, stalling KLA's growth trajectory.

FV impact
High
Trigger
6-18 months

Margin Compression via R&D

· Low

Defect detection at angstrom levels demands exponentially higher R&D, structurally degrading peak operating margins below 35%.

FV impact
Moderate
Trigger
24-36 months
Early-warning signals to monitor
MetricCurrentTrigger threshold
Consecutive quarters of declining WFE capex forecasts.MonitorDeterioration versus the report thesis
Increased stringency in US Department of Commerce export controls.MonitorDeterioration versus the report thesis
Sequential operating margin degradation below 38%.MonitorDeterioration versus the report thesis
Delay in major foundry 2nm production schedules.MonitorDeterioration versus the report thesis
Deceleration in advanced packaging (CoWoS) capacity expansion.MonitorDeterioration versus the report thesis

§3 Financial history

Income statement — last six periods
Line itemT−0T−1T−2T−3T−4CAGR
Period2021-06-302022-06-302023-06-302024-06-302025-06-30Trend
Revenue—$9.21B$10.50B$9.81B$12.16B+7.2%
Gross profit—$5.62B$6.28B$5.88B$7.40B+7.1%
Operating income—$3.65B$3.99B$3.64B$5.01B+8.2%
Net income—$3.32B$3.39B$2.76B$4.06B+5.2%
EPS (diluted)$13.37$21.92$24.15$20.28—+11.0%
EBITDA—$4.01B$4.50B$3.90B$5.34B+7.4%
R&D—$1.11B$1.30B$1.28B$1.36B+5.3%
SG&A—$860.0M$986.3M$969.5M$1.03B+4.6%

Quality scores

Piotroski F-score
9 / 9
0–9 quality composite
Altman Z-score
14.61
Bankruptcy risk (>3 safe)
Beneish M-score
-2.25
Earnings manipulation risk
OCF / Net income
1.01×
>1 indicates high earnings quality
Accounting quality gate
Pass
Sector-adjusted gate
ROIC
36.2%
Return on invested capital
§3

Numbers analysis

Cash flow

Cash-flow quality is reflected in the OCFOperating cash flowCash generated from the company's core operations after working-capital changes but before capital expenditures. The first line of the cash-flow statement. / net incomeNet IncomeNet Income is an income-statement line item used to reconcile revenue to operating profit, pre-tax income, net income, or per-share earnings. It should be compared across periods and against peer disclosure conventions., accounting-quality, and ROICROICReturn on invested capital. Operating profit (after tax) divided by invested capital. The single best gauge of capital-efficiency. Spread over WACC = economic value created. rows above.

Capital allocation

Capital allocation should be evaluated against reinvestment needs, balance-sheet strength, and shareholder returns.

Individual subscribers — §4 onwards11 more sections

Read the full analysis — 11 more sections.

Competitive moat, industry cycle, peer comparison, intrinsic valuation, sensitivity, scenarios, earnings decision tree, position management, investor perspectives, scorecard, and final recommendation.

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REVERSE DCF FAQ

KLAC reverse dcf questions

  1. Reverse DCF for KLAC (KLAC) backs out the revenue or earnings growth rate the current share price implies, holding terminal value, margin, and discount-rate assumptions constant.

FAQ

KLAC — frequently asked questions

  1. Based on our latest analysis, KLAC looks meaningfully overvalued. The current price is $1869 versus a composite fair-value midpoint of $984 (range $736–$1244), which implies roughly 47.3% downside to the midpoint.

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