QS Research · Michael Burry's Scion Capital analyst template · 2006
KLA CORP (KLAC)
As of 2026-11-08 · 13/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction medium · base case none · downside -12% · upside +26%
The market has repriced KLAC down 54.9% from its 52-week high on sector-wide AI-capex fear even though Q1 FY2027 revenue of $4.14B beat the $4.0B +/- $200M guide and Q2 FY2027 is guided to $4.7B +/- $200M with non-GAAP EPS of $1.44 +/- $0.11; the operating trend is up, not broken. But the stock is not statistically cheap: at 27.2x TTM EV/EBITDA, 12.74x EV/Sales and 34.3x P/E, the base case at today's multiple is roughly flat; 24.0x TTM EBITDA gives $121.90 (-12.0%) and 34.0x gives $174.10 (+25.7%). That is a positive but insufficient risk/reward for a long, and the upside is not small enough for a short, so the verdict is watch. I use section 13's TTM to Sep 30, 2026 base: EBITDA $6.80B, net debt $4.36B, 1,302.96M shares, and price $138.49.
Key numbers
- Share price: $138.49
- Market cap: $180.45B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $14.51B
- EV / EBITDA (TTM): 27.2x
- P/E (TTM): 34.3x
- Price / book: 27.66x
The 15 boxes
- ✓ 1. Long-form business notes
KLA is a process-control and process-enabling equipment plus service franchise: FY2026 revenue was $13.58B, net income $4.83B and operating cash flow $4.14B, versus $6.92B, $2.08B and $2.19B in FY2021, i.e. the business roughly doubled in six years while services supplied about 23% of FY2026 revenue. Structure changed between the oldest and newest 10-K here: four reportable segments in FY2021 (including PCB, Display and Component Inspection, plus an Other segment) versus three in FY2026 (Semiconductor Process Control, Specialty Semiconductor Process, PCB and Component Inspection). Demand visibility rose sharply — backlog $7.86B at June 30, 2025 to $12.57B at June 30, 2026 on the AI infrastructure buildout — against heavy customer (TSMC >10% of revenue in each of FY2026/2025/2024) and geographic (87% international in FY2026) concentration.
- ✓ 2. Competitive advantage
KLA has a durable but contested advantage: customers buy on system performance, reliability, technical service and cost of ownership, and the 10-K cites long-term customer relationships, global support, R&D and a 9,100-patent portfolio as defenses, while saying no single patent is essential. It competes with Applied Materials, ASML, Hitachi High-Tech, Lasertec and Onto Innovation, some of which may have greater resources, and the latest risk-factor diff newly or heavily rewrites the risk that it may not compete successfully worldwide. FY2021-FY2026 XBRL shows revenue rising from $6.92B to $13.58B, net income from $2.08B to $4.83B and operating cash flow from $2.19B to $4.14B, so the financial history supports a real franchise, but China revenue at 30% in FY2026 and a highly concentrated customer base are limits.
- ✓ 3. 10-Q takeaways
Q1 FY2027 (three months ended September 30, 2026) was a record-growth quarter: revenue $4,136.0 million, up 13% sequentially and 29% year over year, gross margin 61.9%, GAAP diluted EPS $1.18 (non-GAAP $1.22), and the company guided Q2 FY2027 revenue to $4.7 billion +/- $200 million. Cash generation was strong (operating cash flow $1.53 billion for the quarter, $4.51 billion LTM; free cash flow $1.34 billion / $4.04 billion LTM) and funded $935.8 million of buybacks plus $305.1 million of dividends. Inventory rose to $4,090.4 million from $3,648.5 million at June 30, 2026, China grew to 34.5% of revenue, and the effective tax rate rose to 15.1% on Pillar Two UTPR. The 10-Q discloses one listed risk factor (IP protection, including AI/ML-assisted misappropriation) and otherwise no material risk-factor changes since the FY2026 10-K.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ✓ 11. Impression of the shareholder letter
Filled; members read this box.
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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