KLA Corporation (KLAC) reported on Oct. 28, 2026 that revenue for the quarter ended Sept. 30, 2026 was $4.14B, above the analyst estimate of $4.04B, and adjusted EPS was 1.22 against an estimate of 1.19. The results came after the market close. The shares were quoted down 5.69% on the latest quote (Oct. 30, 2026), at 157.91 USD. That move came two sessions after the report, and no confirmed cause has been given. Figures here are current as of Oct. 30-31, 2026 and cover KLA's fiscal first quarter of 2027.
Key facts
- Oct. 28, 2026: KLA reported adjusted EPS of 1.22 versus an estimate of 1.19, and revenue of $4.14B versus an estimate of $4.04B.
- Quarter ended Sept. 30, 2026: revenue rose 28.9% and net income rose 38.1% from the year-ago quarter. Net income was $1.55B.
- Same quarter: operating margin (the share of sales left after running costs) was 45.0% on FMP's basis, the highest of the five quarters FMP shows. Management reported a non-GAAP operating margin of 46.1%.
- Same quarter: free cash flow (cash from operations minus capital spending) was $1.34B.
- Oct. 30, 2026: the shares were quoted at 157.91 USD, down 5.69%. The 52-week range is 107.196-307.37 USD. Market cap is $206.07B.
- Next report: FMP lists Feb. 4, 2027, with an EPS estimate of 1.42 and a revenue estimate of $4.72B. Management pointed to an earnings call "in late January," so the sources differ.
The 1.22 figure above is the adjusted EPS that analysts track. The 1.18 figure is the GAAP (standard accounting) number from the filing.
What happened
KLA makes inspection and measurement tools that chipmakers use to find defects during manufacturing. The industry calls this "process control." The more complex the chip, the more checking it needs, which is why KLA tends to do well when chips get harder to build.
The quarter beat on both revenue and EPS, and margins widened. This table shows the margin trend on FMP's figures, since that is where the quarter stood out:
| Quarter ended | Revenue | Gross margin | Operating margin | |---|---|---|---| | Sept. 30, 2025 | $3.21B | 61.3% | 41.7% | | Dec. 31, 2025 | $3.30B | 61.4% | 41.3% | | Mar. 31, 2026 | $3.42B | 61.1% | 41.2% | | June 30, 2026 | $3.66B | 61.4% | 42.5% | | Sept. 30, 2026 | $4.14B | 61.9% | 45.0% |
The table shows revenue climbing every quarter while operating margin stayed in a narrow band, then jumped in the latest quarter. Gross margin barely moved, so most of the gain came from operating costs growing more slowly than sales.
By product. Defect Inspection was the largest line at $2.11B. Patterning, which covers tools used to align and measure the layers of a chip, brought in $862.5M. Service revenue, from maintaining tools already installed, was $850.5M. Defect Inspection and Patterning were both higher than in Q4 FY2025, the comparison period FMP lists for its segment data. Management said Service was "up 14% year over year."
By region. China was the largest region at $1.43B, followed by Taiwan at $1.02B, North America at $618.0M and Korea at $497.2M. Management said China is growing more slowly than the overall business, so its share of sales is expected to shrink over time.
Why management says it happened. According to the earnings call, the main drivers were:
- Spending on leading-edge chips tied to AI infrastructure.
- Rising process-control needs in advanced packaging, the step that joins multiple chips into one unit.
- Memory, especially DRAM, where new factories and high-bandwidth memory raise inspection demands.
- A growing installed base of tools running at high utilization, which supports service revenue.
- A recovery in supply. Management said the first half of 2026 was held back by supply, not demand.
Management also raised its view of the overall wafer equipment market to approximately the mid-$150 billion range for calendar 2026. It said it currently expects that market to exceed $200 billion in calendar 2027. For the December quarter it guided to revenue of $4.7 billion plus or minus $200 million and non-GAAP EPS of $1.44 plus or minus $0.11, which readers can compare with the 1.42 and $4.72B analyst estimates cited below. Asked about the shape of 2027, Higgins expected sequential growth for the next several quarters, which he said "Sort of implies second half stronger," but without "the same significant uptick in half to half growth." He described it as "a little more linear."
Cash. Operating cash flow was $1.53B and free cash flow was $1.34B, up from $1.07B in the year-ago quarter. KLA spent $935.8M on buybacks and $305.1M on dividends in the quarter. It held $4.74B in cash and short-term investments against $5.99B of total debt. FMP reports net debt of $4.46B, a figure that does not equal debt minus cash and short-term investments.
Why it matters for investors
Quality is high. The Piotroski score, a 0-9 health check on profits, cash flow and leverage, is 8. The Altman Z score, a bankruptcy-risk gauge where higher is safer, is 13.13. Net margin over the trailing 12 months is 36.2%.
The valuation is rich. On trailing 12-month figures, KLA trades at a P/E (price relative to yearly earnings) of 39.25, price/sales of 14.21 and price/free cash flow of 51.04. The dividend yield is 0.5%. Compared with peers:
| Company | P/E | Net margin | |---|---|---| | KLA | 39.25 | 36.2% | | ASML | 40.34 | 34.1% | | Applied Materials (AMAT) | 33.43 | 30.1% | | Axcelis (ACLS) | 33.36 | 10.7% | | Camtek (CAMT) | 145.85 | 7.4% |
KLA's net margin is the highest in this group, and its P/E sits near ASML's and above Applied Materials'.
Analysts lean positive but are split on price. Of 44 ratings, 28 are Buy, 14 are Hold and 2 are Sell, for a consensus of "Buy." The average price target is 217.90 USD and the median is 210.00 USD. Targets range from a low of 133.00 USD to a high of 425.00 USD. After the report, Citigroup, Wells Fargo and Stifel kept their positive ratings, while UBS and Susquehanna kept Neutral ratings. FMP's discounted cash flow model, which values a company from projected cash flows, gives a much lower figure of 57.29 USD per share. That is one model's estimate, and such models are sensitive to their assumptions.
Our MoonshotScore. Stock Expert AI's MoonshotScore V2 for KLA is 85.3 (Exceptional). The pillars, scored against the sector, are:
- Quality: 96 (very strong)
- Safety: 76
- Growth: 75
- Momentum: 58 (middling)
- Valuation: 26 (weak)
Risks. Management named several:
- Persistently high memory costs for the image-processing systems inside its tools, which pressure gross margin.
- Long lead times, with optical components the main gating item.
- Mix headwinds, since advanced packaging and non-chip inspection grow with lower margins than the core business.
- Customer factories that are not ready (clean rooms, power, construction), which can delay tool acceptance.
- Slower growth in China and only modest growth in older chip technologies.
What to watch next
- Next earnings report: FMP lists Feb. 4, 2027, with analysts expecting EPS of 1.42 and revenue of $4.72B. Management said it will have more to say about market and customer segment expectations for 2027 "in late January," so the sources differ on timing.
- Gross margin path: Higgins said the Investor Day target range is 63% to 64%. Management's non-GAAP gross margin was 62.7% in the quarter, and it guided the December quarter to 62.5% plus or minus 1 percentage point. FMP's own figure is 61.9%. Higgins said "the memory environment will continue to be challenging," with improvement coming in gross margin, and added "I do not know exactly when we will start to see it." He said that as KLA moves into "the middle to the back half of 2027 into 2028," he expects gross margin to be consistent with the Investor Day model.
- Longer-range estimates: for the period ending Sept. 30, 2028, analysts estimate revenue of $6.16B and EPS of 1.97 (11 analysts).
- Supply and customer readiness: whether lead times and factory readiness limit shipments.
Frequently asked questions
Q: Why were KLAC shares quoted lower on Oct. 30?
KLA reported results that beat estimates on Oct. 28, and the shares were quoted down 5.69% on the latest quote (Oct. 30, 2026) at 157.91 USD. That quote came two sessions after the report. The company has not given a reason for the move, and the evidence does not explain it.Q: Is KLA's growth coming from AI?
Management tied much of it to leading-edge chips for AI infrastructure and to advanced packaging. Revenue rose 28.9% from the year-ago quarter, to $4.14B. Memory (especially DRAM) and service revenue also contributed, according to the earnings call.Q: What do analysts think KLA stock is worth?
The consensus target is an average of 217.90 USD and a median of 210.00 USD. The targets span a wide range, from 133.00 USD to 425.00 USD. These are analyst opinions, not predictions from Stock Expert AI.This is educational content, not investment advice. Past performance does not guarantee future results.