• KLA Corporation is scheduled to report its fourth-quarter fiscal 2025 results on July 31, driven by heightened demand in advanced packaging due to increasing chip integration complexity and AI infrastructure needs.
• Export restrictions and new tariffs are expected to compress gross margins in the upcoming quarter, with KLA's services division facing particular risk from these geopolitical headwinds.
• We'll examine how concerns over tariff impacts on margins could influence the broader investment narrative for KLA.

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KLA Investment Narrative Recap

To be a KLA shareholder, you need to believe in the company’s pivotal role at the intersection of advanced packaging and AI infrastructure, with secular demand trends driving future growth. However, the latest update that new export restrictions and tariffs may compress gross margins, especially in the services business, brings the biggest risk squarely into the near term, just as excitement over advanced packaging ramps up ahead of Q4 results. The impact to earnings could be material if margin compression persists amid trade headwinds.

Amid all this, KLA’s recently announced $1.5 billion unsecured revolving credit facility stands out. While this gives the company additional financial flexibility, it is especially relevant as export restrictions and tariffs put added pressure on operational resilience, reinforcing the need to manage through unpredictable geopolitical and margin risks as the industry evolves.

Yet despite the company’s long record of service revenue stability, export controls remain a key risk that investors should be aware of, because...

Read the full narrative on KLA (it's free!)

KLA's narrative projects $14.1 billion revenue and $4.9 billion earnings by 2028. This requires 6.8% yearly revenue growth and an earnings increase of $1.2 billion from $3.7 billion.

Uncover how KLA's forecasts yield a $848.78 fair value, a 8% downside to its current price.

Exploring Other Perspectives

Five fair value estimates from the Simply Wall St Community span US$548 to US$849 per share, reflecting wide-ranging opinions. As trade and tariff uncertainties threaten margins, it is worth exploring how different perspectives weigh these risks and growth catalysts for KLA’s outlook.

Explore 5 other fair value estimates on KLA - why the stock might be worth 41% less than the current price!

Build Your Own KLA Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your KLA research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.
• Our free KLA research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate KLA's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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