Buffett Brain · Research note
Score updated 26 Sept 2026 · analysis from 2 Jun 2026
KLAC· Technology
KLA
KLA is a magnificent toll booth on the making of every advanced chip, priced as a certainty at 54 times earnings.
Buffett fit
Strong fit
Owner
98
Durability
90
Management
81
Price
0
Score updated 26 Sept 2026 · analysis from 2 Jun 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Technology stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If I owned all of KLA, I would sleep well over the business and poorly over the price I would have to pay for it.
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The durability here is genuine and earns its 90 score. As chips grow more complex, the cost of a missed defect climbs, so fabs lean harder on KLA's tools, and a 36.3 percent tells you the is wide and well defended.
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Management has been a good steward, revenue at 15.1 percent and earnings at 22.7 percent while buying back stock at a steady clip.
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Here is where I have to be blunt: there is no at this price.
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- The full reasoning behind all four pillars
- Graham, Lynch and Greenblatt on the same stock
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
7- 1A 61.8 percent shows KLA's process-control tools command premium prices few rivals can touch.
- 2A 42.1 percent means more than 40 cents of every revenue dollar reaches operating profit.
- 3A 36.3 percent this year, and 34.6 percent over five years, proves the capital earns superb returns.
- 4 equal to 92 percent of net income confirms the reported earnings turn into real spendable cash.
Concerns
6- 1The stock is expensive: a ratio of 54 and an owner-earnings yield of just 1.49 percent leave no and demand years of flawless growth simply to break even.
- 2An EV-to- of 48.9 says the whole enterprise is priced for perfection, well above what a sober buyer would pay.
- 3Earnings have fallen as much as 15.9 percent in a downturn, a reminder this business rides the semiconductor cycle and the down years are real.
- 4 of 1.05 is higher than I like to see, even though coverage is strong, and it adds risk if the cycle turns hard.
Price history
$207-36.5%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
KLA sells the inspection and metrology machines that semiconductor fabs use to find defects and measure features as chips are built, and almost no leading-edge wafer gets made without its tools. It earns a 61.8 percent and a 42.1 percent because it owns the lion's share of process control, a small but indispensable slice of every fab's budget. A growing pile of service and software revenue rides on the installed base, which is the closest thing this industry has to a rent check.
How this analysis has moved
The call has held across 2 reviews.
Sep 27, 2026 → Oct 4, 2026
What other investors would say
The same company, judged by three other documented playbooks.
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