KLA Corporation (KLAC) shares fell 9.55% on the latest quote, as of Oct. 22, 2026, to $147.83. The drop comes six days before the company reports earnings on Oct. 28. No company release accompanied the move, so the cause is not confirmed. The stock now trades well below where Wall Street analysts' price targets sit, while the company's most recent results were strong.
Key facts
- Oct. 22, 2026: KLAC traded at $147.83, down 9.55% on the latest quote. Its 52-week range is $107.196 to $307.37. Market cap is $192.92B.
- Oct. 28, 2026: Next earnings report. Analysts expect earnings per share (EPS, profit divided by share count) of $1.18 and revenue of $4.04B.
- July 28, 2026: KLA reported fiscal fourth-quarter results (quarter ended June 30, 2026). EPS was $1.05 against an estimate of $1.00, and revenue was $3.66B against an estimate of $3.61B.
- Quarter ended June 30, 2026: Net income was $1.36B, up 13.3% from the year-ago quarter. Revenue rose 15.2% from the year-ago quarter.
- Oct. 6, 2026: Morgan Stanley maintained its Overweight rating, the only rating action in the last 30 days.
What happened
KLA makes the inspection and measurement tools that chipmakers use to find defects during manufacturing. On Oct. 22, 2026, the stock fell 9.55% on its latest quote. We found no company announcement behind it. A Zacks preview dated Oct. 21 said earnings are expected to grow. Without a confirmed reason, this article treats the drop as a price move and focuses on what the fundamentals show.
The last report was solid. For the quarter ended June 30, 2026, KLA beat both the EPS and revenue estimates, by $0.05 on EPS and by $49.6M on revenue. Diluted EPS under standard accounting was $1.04, slightly below the $1.05 headline figure compared with the estimate.
By product line, the data provider's segment feed lists the following for that quarter:
- Defect Inspection: $3.52B
- Service: $1.60B
- Patterning: $1.34B
- Specialty Semiconductor Process: $280.7M
- PCB and Component Inspection: $262.7M
- Other: $70.1M
By region, the provider's geographic data appears to cover a different or longer period than the June 2026 quarter, since the regional figures add up to roughly double that quarter's revenue, and its period labeling looks inconsistent. As a rough mix only, Taiwan and China were the largest regions, followed by North America and Korea, with Europe and Israel, Japan and the rest of Asia smaller. We are not presenting dollar figures for these regions.
Why it matters for investors
The five-quarter trend is steady, with a profit rebound. Revenue climbed each quarter, from $3.17B in the quarter ended June 30, 2025, to $3.21B, $3.30B, $3.42B and then $3.66B. Margins held in a narrow band:
| Quarter ended | Gross margin | Operating margin | Net income | |---|---|---|---| | June 30, 2025 | 62.0% | 42.6% | $1.20B | | Sept. 30, 2025 | 61.3% | 41.7% | $1.12B | | Dec. 31, 2025 | 61.4% | 41.3% | $1.15B | | March 31, 2026 | 61.1% | 41.2% | $1.20B | | June 30, 2026 | 61.4% | 42.5% | $1.36B |
Operating margin, the share of sales left after running costs, dipped through the middle of the year and recovered in the latest quarter. Gross margin barely moved. Faster revenue growth in the latest quarter therefore translated into higher profit.
Cash flow was weaker than the profit picture. Free cash flow (cash from operations minus capital spending) was $817.1M in the June 2026 quarter. That was up from $622.3M in the March quarter but below the $1.26B in the December 2025 quarter, the $1.07B in the September 2025 quarter and the $1.06B in the year-ago quarter. Operating cash flow was $906.4M. Capital spending was steady at about $89.3M. KLA also returned cash: $571.0M in buybacks and $305.3M in dividends in the June 2026 quarter. Net income grew while free cash flow fell short of earlier quarters, so cash conversion is worth checking in the next report.
The balance sheet is sound. As of June 30, 2026, KLA held $4.90B in cash and short-term investments against $6.15B in total debt. The data provider reports net debt of $4.50B, a figure that appears to be calculated on cash only, without short-term investments. Shareholders' equity was $6.35B. The Altman Z score (a bankruptcy-risk gauge where higher is safer) is 12.66, and the Piotroski score (a 0-9 measure of financial health) is 6.
Valuation is high, but similar to ASML's. On trailing 12-month figures, KLA's price-to-earnings (P/E) ratio is 40.13, price-to-sales is 14.21 and enterprise value to EBITDA is 32.61. The dividend yield is 0.6%. Net margin, the share of revenue kept as profit, is 35.6%. Peers:
| Company | P/E (trailing) | Net margin | |---|---|---| | KLA (KLAC) | 40.13 | 35.6% | | ASML (ASML) | 40.54 | 34.1% | | Applied Materials (AMAT) | 32.18 | 30.1% | | Axcelis (ACLS) | 34.91 | 10.7% | | Camtek (CAMT) | 149.35 | 7.4% |
KLA's profit margin is the highest in this group, and its P/E is close to ASML's and higher than Applied Materials'.
Analysts remain positive. Of 44 ratings, 28 are Buy, 14 are Hold and 2 are Sell, for a consensus of "Buy." Price targets average $223.88, with a median of $220.00, a high of $325.00 and a low of $180.00. The Oct. 22 quote of $147.83 is below even the lowest target. Targets are opinions and often lag fast price moves. For longer-range context, analysts estimate revenue of $5.92B and EPS of $1.90 for the period ending Sept. 30, 2028, across 14 analysts.
Our MoonshotScore. Stock Expert AI's MoonshotScore V2 for KLA is 80.9, rated Exceptional. The sector-relative pillars are:
- Quality: 95 (very strong)
- Growth: 74
- Safety: 70
- Momentum: 55 (middling)
- Valuation: 26 (weak)
Risks and what could go wrong
- Valuation: The valuation pillar is the weakest at 26. A P/E above 40 leaves little room for a disappointing quarter. A discounted-cash-flow model from the data provider estimates a value of $55.26 per share. That is one model's output with its own assumptions, not a forecast, but it shows how much of the price rests on future growth.
- Geographic concentration: China appears to be a very large market for KLA, though the provider's regional data has inconsistent period labeling, so we do not tie a figure to a specific quarter. Changes in export rules or trade policy could affect that revenue. Taiwan is also large, which ties results to a small number of chipmakers.
- Cyclical demand: Chip equipment sales depend on how much customers spend building factories, and that spending moves in cycles.
- Cash flow: Free cash flow in the latest quarter was lower than in several earlier ones, even as profit rose.
- Insider selling: Among the 30 most recent insider filings, those dated in the last 90 days show 9 sales and no open-market purchases. Older filings in that window may be missing, and insiders sell for many reasons, including pre-planned programs.
- Momentum: The Oct. 22 decline and a 52-week range from $107.196 to $307.37 show how widely the stock has swung.
What to watch next
1. Oct. 28 results: Does KLA meet the $1.18 EPS and $4.04B revenue estimates? 2. Margins: Does operating margin hold near the 42.5% of the June 2026 quarter? 3. Free cash flow: Does it recover toward the levels of earlier quarters? 4. Regional mix: Any comment from management on China demand or export restrictions. 5. Outlook: What management says about demand and guidance for the coming quarter, which typically moves the stock more than the quarter just completed. 6. Analyst reaction: Whether targets and ratings change after the report.
Frequently asked questions
Q: Why did KLA stock fall on Oct. 22, 2026?
The cause has not been confirmed. KLA shares dropped 9.55% on the latest quote, as of Oct. 22, 2026, to $147.83. We found no company release explaining the move.
Q: When does KLA report earnings and what do analysts expect?
KLA reports on Oct. 28, 2026. Analysts expect EPS of $1.18 and revenue of $4.04B. In its previous report, for the quarter ended June 30, 2026, KLA reported EPS of $1.05 against an estimate of $1.00 and revenue of $3.66B against an estimate of $3.61B.
Q: Is KLA expensive compared with other chip equipment stocks?
Based on trailing earnings, KLA's P/E of 40.13 is close to ASML's 40.54 and higher than Applied Materials' 32.18 and Axcelis' 34.91. Camtek's is higher at 149.35. KLA's net margin of 35.6% is the highest of the group. Our MoonshotScore valuation pillar is 26, which indicates a rich price compared with its sector. This is information, not a recommendation to buy or sell.
This is educational content, not investment advice. Past performance does not guarantee future results.