KLAC
KLA Corporation
Technology · Semiconductor Equipment & Materials · United States · Stock
Score Breakdown
Scored for Dividend Income profile
Sub-scores are 0–20 each; Model Score is weighted by your selected investment goal. How it works →
Why Ranked Here
- Strong growth metrics — including 23.9% revenue growth and 49.8% EPS expansion — combined with perfect profitability scores and near-perfect dividend scores drove the composite to 75.2/100.
- Consistent sequential quarterly revenue growth from 2025Q4 through 2026Q3 and a recovering operating income trajectory contributed positively to the momentum sub-score.
- The model assigned KLA a 'Strong Candidate' label with a Medium risk rating, reflecting the balance between its outstanding earnings quality and the structural zero on the theme sub-score.
Why Not Higher
- The theme sub-score of zero, despite KLA carrying both AI Infrastructure and Semiconductors macro theme assignments, weighed on the composite and prevented a higher overall result.
- The financial health factor scored 12.0/20, reflecting constraints such as a debt-to-equity ratio of 1.25, which limited the total score relative to the near-perfect marks in profitability and dividend factors.
Data Confidence
10 / 10
Very High — full data coverage
Why This Score
Grounded in figures from this company's SEC EDGAR filings — not a restatement of the score itself.
Revenue grew from FY2024's $9,812,247,000 to FY2025's $12,156,162,000, a gain of +23.9%. Net income rose +47.1% over the same period, and diluted EPS expanded +49.8% from FY2024 to FY2025.
The model rewarded the combination of double-digit top-line expansion and even faster bottom-line and per-share growth, reflecting operating leverage that amplified revenue gains into outsized earnings improvement.
In FY2025, KLA posted an operating margin of 38.2%, a net margin of 33.4%, and a return on assets of 25.3%.
These metrics indicate that the company converts a large share of each revenue dollar into operating and net profit while generating substantial returns on its asset base, which the model rewarded with a perfect sub-score.
Filing evidence currently available does not support a more specific explanation for this factor.
Revenue has risen sequentially across the last four reported quarters: $3,174,741,000 in 2025Q4, $3,209,696,000 in 2026Q1, $3,297,146,000 in 2026Q2, and $3,415,078,000 in 2026Q3. Operating income followed a similar upward trajectory, reaching $1,416,761,000 in 2026Q3 after a brief dip to $1,309,476,000 in 2026Q1, while net income stabilized near $1,200,990,000 in 2026Q3 after a trough of $1,121,040,000 in 2026Q1.
The model recognized consistent revenue acceleration and recovering operating and net income as positive momentum signals, though the temporary softness in net income during mid-period likely tempered the score below the maximum.
Dividends per share have increased every year from FY2022's $4.20 to FY2023's $5.20, FY2024's $5.65, and FY2025's $6.75, while the FY2025 payout ratio stood at 22.3%, leaving substantial earnings retained.
The model rewarded the consistent multi-year dividend growth trajectory alongside a conservative payout ratio that signals both commitment to shareholder returns and ample capacity to sustain or grow the dividend further.
KLA is assigned to the macro themes of AI Infrastructure and Semiconductors.
Although the company carries two high-profile macro theme assignments, this assignment did not translate into a positive sub-score under the model's current methodology.
Research Summary
AI-generated analysis reflects data and conditions as of the report date shown above. Verify any specific figures through primary sources before acting on this analysis.
KLA Corporation delivered exceptional financial performance in FY2025, growing revenue by 23.9% to $12,156,162,000 while net income surged 47.1% and diluted EPS expanded 49.8%, demonstrating powerful operating leverage. The company's profitability metrics are best-in-class, with an operating margin of 38.2%, a net margin of 33.4%, and a return on assets of 25.3%. Quarterly momentum remains intact, with revenue rising sequentially across the last four reported quarters to $3,415,078,000 in 2026Q3, and the company has grown its dividend every year from $4.20 in FY2022 to $6.75 in FY2025 while maintaining a conservative 22.3% payout ratio. The composite model score of 75.2/100 reflects these strengths alongside a medium risk rating, with the theme sub-score representing a structural drag on the overall result.
Plain English
KLA is a highly profitable semiconductor equipment company that grew its revenue by nearly 24% last year, keeps raising its dividend every year, and has been generating more revenue each quarter — making it a strong candidate in the AI Infrastructure and Semiconductors space, though its overall score is held back partly because its macro theme assignment didn't translate into model points.
Bull Case vs. Bear Case
Bull Case
- Revenue grew 23.9% year-over-year to $12,156,162,000 in FY2025, with net income rising even faster at 47.1% and diluted EPS expanding 49.8%, showcasing significant operating leverage.
- KLA's FY2025 operating margin of 38.2% and net margin of 33.4% reflect an exceptionally efficient business that converts a large share of each revenue dollar into profit, earning a perfect profitability sub-score.
- Dividends per share have grown every year from $4.20 in FY2022 to $6.75 in FY2025, while the payout ratio remains a conservative 22.3%, signaling both commitment to shareholders and ample capacity for continued dividend growth.
Bear Case
- The theme sub-score registered zero despite KLA being assigned to the high-profile AI Infrastructure and Semiconductors macro themes, acting as a structural drag on the composite score under the model's current methodology.
- Net income showed a temporary trough of $1,121,040,000 in 2026Q1 before recovering, suggesting some mid-period earnings softness that tempered the momentum sub-score below its maximum.
- The financial health factor scored below the maximum, and the available filing data shows a debt-to-equity ratio of 1.25, indicating a meaningful level of leverage relative to equity.
What Could Change the Picture
Bullish Triggers
- If the model's theme methodology is updated to reward AI Infrastructure and Semiconductors assignments, KLA's existing macro theme designations could translate into a meaningfully higher composite score.
- Continued sequential revenue acceleration — already evident from $3,174,741,000 in 2025Q4 to $3,415,078,000 in 2026Q3 — alongside recovering operating income would further strengthen the momentum signal.
Bearish Triggers
- A reversal in the sequential quarterly revenue trend or a renewed decline in operating income from the 2026Q3 level of $1,416,761,000 would undermine the positive momentum narrative.
- Any deterioration in the debt-to-equity ratio beyond its current FY2025 level of 1.25 could pressure the financial health factor score further.
Risk Profile
Medium RiskKLA carries a Medium risk rating, supported by a debt-to-equity ratio of 1.25 in FY2025 and a temporary dip in net income to $1,121,040,000 in 2026Q1, though both operating and net income have since recovered toward 2026Q3 levels of $1,416,761,000 and $1,200,990,000 respectively.
This report is for educational and research purposes only. It does not constitute financial, investment, legal, or tax advice — always conduct your own due diligence before making investment decisions.