KLA Corporation (KLAC) Intrinsic Value & DCF Valuation
Semiconductors · NASDAQ
Current Price
$254.54
Intrinsic Value
$153.7
-65.6% margin of safety
What Is KLA Corporation's Intrinsic Value?
As of 2026-06-12, our base-case DCF model estimates the intrinsic value of KLA Corporation (KLAC) at $153.7 per share, compared with a market price of $254.54, a margin of safety of -65.6%. The base case assumes 18.6% annual free cash flow growth and a 10.0% discount rate.
Across the sensitivity grid the estimate spans $129.41 to $181.07. Intrinsic value is an estimate built on assumptions, not a fact. A higher discount rate or slower growth pushes the estimate down, while stronger cash flow growth lifts it.
How our DCF works · Recalculate with your own assumptions · What is intrinsic value?
Is KLA Corporation (KLAC) Undervalued?
At the current price of $254.54, KLAC trades above our base-case intrinsic value estimate by a meaningful margin. By this model the stock looks expensive, though faster growth than we assume would change the picture.
COMPETITIVE MOAT
↑Process Control Dominance
KLA's deep expertise in process control and metrology is critical for advanced chip manufacturing. This specialized knowledge creates high switching costs for foundries.
↑R&D Investment & Innovation
Continuous, substantial investment in research and development allows KLA to stay ahead of evolving semiconductor technology. This fuels their ability to offer cutting-edge solutions.
↑Industry Infrastructure Dependence
The semiconductor industry's reliance on KLA's essential equipment for quality assurance and yield improvement creates a sticky customer base. Expansion of capacity directly benefits KLA.
INVESTMENT RISKS
↓Cyclical Semiconductor Market
The semiconductor industry is inherently cyclical, with periods of oversupply and demand fluctuations. This can impact KLA's order volumes and revenue.
↓Technological Disruption
While KLA invests heavily in R&D, a breakthrough in alternative process control technologies could challenge its market position. Competitors may emerge.
↓Geopolitical & Trade Tensions
Global trade disputes and geopolitical instability can disrupt supply chains and impact international sales for semiconductor equipment manufacturers like KLA.
Base case
KLAC base case valuation
Intrinsic Value
$153.7
Margin of safety
-65.6%
Expected annual return
-9.6%
Base case assumptions: 18.6% annual growth, 10.0% discount rate, 30x exit multiple, 5 year projection. Data as of 2026-06-12.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the KLAC valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for KLA Corporation respond.
Open DCF Calculator for KLACCompany Overview
KLA Corporation specializes in creating, manufacturing, and distributing advanced solutions vital for process control, process optimization, and yield enhancement throughout the global semiconductor and broader electronics industries. The company organizes its business into four main segments: Semiconductor Process Control, Specialty Semiconductor Process, PCB, Display and Component Inspection, and an 'Other' category. For integrated circuit (IC) fabrication, KLA offers a comprehensive range of products. These include systems for wafer inspection, review, and metrology; defect inspection and metrology for both wafers/substrates and reticles; chemical and materials quality analysis tools; and real-time process management and wafer handling diagnostics essential for IC and original equipment manufacturer (OEM) production. Furthermore, the company develops software for live process control, defect excursion identification, process corrections, and defect classification. KLA also supplies refurbished and remanufactured equipment. Beyond IC manufacturing, KLA supports specialty semiconductor production. This includes benchtop metrology, surface characterization, and electrical property measurement services suitable for general-purpose and laboratory use. They also provide technologies and solutions for etching, plasma dicing, deposition, and various other wafer processing tasks within the semiconductor and microelectronics sectors. Within the printed circuit board (PCB) market, KLA delivers solutions such as direct imaging, inspection, optical shaping, additive printing, and computer-aided manufacturing and engineering. For the display industry, their offerings encompass inspection and electrical testing systems to pinpoint and categorize defects, as well as equipment for defect repair. KLA also supplies inspection and metrology systems designed to improve quality control and yield in both advanced and conventional semiconductor packaging markets. Established in 1975, the company was initially known as KLA-Tencor Corporation before rebranding as KLA Corporation in July 2019. Its corporate headquarters are situated in Milpitas, California.
Financial Metrics — KLAC Stock Valuation Data
Revenue/Share (TTM)
$10.00
FCF/Share (TTM)
$3.07
ROIC (TTM)
36.3%
ROE (TTM)
89.1%
P/FCF
82.8x
EV/EBITDA
57.1x
FCF Yield
1.21%
Debt/Equity
1.05x
Based on trailing twelve-month data, KLAC shows a free cash flow per share of $3.07 and a ROIC of 36.3%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 82.8x and FCF yield of 1.21% are important context metrics when evaluating KLAC's stock valuation relative to peers.
Frequently Asked Questions
What is the intrinsic value of KLAC?
KLA Corporation currently generates $3.07 in free cash flow per share. At the current price of $254.54, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is KLAC undervalued?
KLAC trades at a P/FCF ratio of 82.8x with a free cash flow yield of 1.21%. This elevated P/FCF suggests the market is pricing in significant future growth. However, whether KLAC is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value KLAC stock using DCF?
To perform a DCF valuation on KLA Corporation: (1) Start with the trailing free cash flow per share ($3.07) as the base, (2) project future FCF growth over 5-10 years based on Semiconductors industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting KLAC's risk profile — with a debt-to-equity of 1.05x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to KLAC?
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For KLA Corporation, this means projecting how much free cash flow the company will produce over the next 5-10 years, shaped by Semiconductors trends, then discounting those amounts to today's dollars. KLAC's ROIC of 36.3% indicates strong capital efficiency, which supports higher growth assumptions in the DCF model.
How does WACC affect KLAC stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For KLAC, with a debt-to-equity ratio of 1.05x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 57.1x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See KLAC PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Technology valuationsDCF and P/E value KLAC with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-06-12. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.