KLA Corporation (KLAC) earns a sell rating as its elevated valuation raises concerns, with margin contraction on the horizon and substantial risks from China. Revenue growth has slowed for three straight quarters, even amid favorable conditions in the memory sector.
Recent Revenue Trends
Analysis reveals decelerating top-line growth across key segments. This trend persists despite tailwinds from a strong memory business. In early September 2025, a hold rating was maintained owing to resilient results and solid cash flows, but ongoing slowdowns demand reevaluation.
Q3 Outlook and Financial Pressures
Upcoming Q3 guidance signals revenue reacceleration. However, margins face contraction, limiting earnings per share growth to single digits. These factors underscore persistent challenges in profitability.
Geopolitical and Capital Allocation Risks
Heavy exposure to China amplifies geopolitical uncertainties. Reduced stock buyback activity further highlights valuation pressures and strategic shifts amid these risks.
