Semiconductor process control & inspection, AGI 9. | Analysis date: 2026-03-13
KLA is the dominant player in semiconductor process control and inspection. AGI score 9: every advanced chip needs KLA's tools to ensure yield. At $1,419/share ($186B market cap), trades at 41x P/E and 34x book. Revenue $12.2B, net income $4.1B, 100% ROE.
KLA provides advanced process control: wafer inspection, reticle/mask inspection, metrology, and data analytics. Three segments: Semiconductor Process Control (78%), Specialty Semiconductor (12%), PCB Inspection (10%). 15,000 employees. Revenue doubled from $6.1B to $12.2B in 4 years. Net margin 33%. Service revenue 22% (recurring).
| Metric | FY2020 | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|---|
| Revenue | $1.5B | $1.9B | $9.2B | $10.5B | $9.8B | $12.2B |
| Net Income | $1.2B | $2.1B | $3.3B | $3.4B | $2.8B | $4.1B |
| Operating Cash Flow | $1.8B | $2.2B | $3.3B | $3.7B | $3.3B | $4.1B |
| Capital Expenditures | $153M | $232M | $307M | $342M | $277M | $335M |
| Gross Profit | $838M | $1.2B | N/A | N/A | N/A | N/A |
| Balance Sheet (Latest FY) | Value |
|---|---|
| Total Assets | $16.1B |
| Cash & Equivalents | $2.1B |
| Property, Plant & Equipment | $1.3B |
| Goodwill | $1.8B |
| Intangible Assets | $445M |
| Long-Term Debt | $5.9B |
| Stockholders Equity | $4.7B |
| Tangible Book Value | $2.5B |
| Tangible Book / Share | $18.46 |
| Shares Outstanding | 133,030,000 |
| Year | Shares Outstanding | Change |
|---|---|---|
| FY2020 | 156,797,000 | - |
| FY2021 | 154,086,000 | -1.7% |
| FY2022 | 150,494,000 | -2.3% |
| FY2023 | 139,483,000 | -7.3% |
| FY2024 | 135,345,000 | -3.0% |
| FY2025 | 133,030,000 | -1.7% |
As chips become more complex (3nm, 2nm, advanced packaging for AI), inspection and process control grows superlinearly. Every defect at advanced nodes costs more. KLA has ~55% market share in wafer inspection and growing. Revenue could reach $20-25B by 2030. At 30x earnings on $7-8B net income, stock could be worth $2,100-2,400/share.
KLA generates 100% ROE, 33% net margins, $4.1B OCF, and has bought back shares for a decade (157M to 133M = 15% reduction). This is one of the highest-quality businesses in the semi supply chain. Pricing power is immense: customers cannot afford to skip inspection at advanced nodes.
At 41x P/E and $186B market cap, KLA is priced as near-perfect. The stock has gone from $551 to $1,419 in one year (+157%). Any deceleration in semi spending could cause a sharp correction. Cyclical downturns cause 20-40% revenue drops.
TSMC, Samsung, and Intel are primary customers. TSMC alone may be 20-30% of revenue. If one major customer delays expansion, KLA feels it directly. China restrictions limit market access. $1.8B goodwill and $445M intangibles from acquisitions.
| Current Price | $1,418.64 |
| Bull Case Price (by 2030-2035) | $5,000 |
| 10x Entry Price (Bull Case / 10) | $500 |
| Current Price vs 10x Entry | $1,418.64 ABOVE entry zone |
Rationale: Revenue to $22B, 35% net margins = $7.7B earnings at 40x = $308B = ~$2,300/share. Aggressive: $5,000 with AI fab buildout. Entry for 10x: $500. Need 2019-style semi downturn.
KLAC at $1,418.64: Trading well above the 10x entry zone (would need a significant pullback for 10x potential).
AGI Score 9/10 — Strong AGI beneficiary.
Floor estimate: Tangible book value per share is $18.46. Current price is well above tangible book: downside protection comes from cash flows, not assets.
Data sources: SEC EDGAR XBRL, yfinance, 10-K filings. Analysis date: 2026-03-13.