Shares of KLA Corporation slid 4.2% to $198.17 on October 6, defying a broadly rising market, after Morgan Stanley, Stifel, and BofA Securities all slashed their price targets in a coordinated vote of concern over valuation — even while each firm kept its bullish rating intact.

  • The Numbers Behind the Cuts Tell a Clear Story About Investor Expectations. Morgan Stanley lowered its target to $227 from $253 , and the key mechanism was blunt: the firm cut its target earnings multiple to 28 times from 36 times, a 22% haircut representing just a 20% premium to KLA's average valuation since 2020 . Stifel dropped to $250 from $270, citing a valuation reset, while BofA Securities also reduced its target . In plain terms, these analysts believe investors should pay less per dollar of KLA's future profits than they recently assumed — even though the business itself is not deteriorating.

  • Earnings Estimates Are Actually Going Up, Which Makes the Cuts More Striking. Morgan Stanley raised its calendar year 2027 revenue forecast for KLA to $21.4 billion from $20.4 billion and boosted its earnings-per-share estimate to $6.77 from $6.23 . The analyst cited improved chip-factory demand and slightly higher profit-margin expectations . This creates an unusual dynamic: the business outlook improved, but the stock's price tag was deemed too rich to justify chasing it higher. KLA currently trades at a price-to-earnings ratio of roughly 56 times trailing profits , a level multiple analysts flag as elevated.

  • A Dominant Market Position Isn't Shielding the Stock From Gravity. KLA commands more than 56% market share in semiconductor process control — six times its nearest rival . Fiscal 2026 revenue reached $13.6 billion , and the company raised its advanced packaging revenue outlook to roughly $1.1 billion for 2026 . Yet valuation has expanded sharply while growth has slowed . With earnings due October 28, the Street is effectively warning that KLA must deliver an outsized beat to justify current prices.

  • China Exposure Adds a Quiet Wild Card. China revenue grew roughly $130 million quarter-over-quarter, now accounting for about 26% of total sales . U.S. export controls restrict advanced equipment sales to China and are expected to reduce KLA's China revenue share significantly . Any tightening of those rules could shrink a revenue stream that currently props up growth.

The consensus Buy rating with an average target near $231 still implies upside — but the gap is narrowing fast. Investors face a paradox: a best-in-class business where the stock price may have already absorbed the good news.