Say No To Trading
Public Markets Investor, Opportunistic Buying & Cost-Basis Management
KLA and its chip-equipment peers are best bought at significantly lower valuations during a down cycle, so downside risk ahead matters more than near-term upside. KLA is only being built up slowly to fix an underweight versus Applied Materials, ASML, Lam Research and Tokyo Electron, with more added if it falls further, and no concern if it jumps back to $250 in the meantime. x.com
KLA has almost no upside even in a best case. Beating 2027 Street EPS estimates of $5 by 100% and applying a 30x multiple, a material premium to its history for the growth, leaves only 1.5% upside. x.com
KLA trades at a premium valuation despite lower growth and less specialization in advanced packaging, the hottest AI segment. Camtek and Onto Innovation often win specific inspection and metrology sockets with better throughput, cost of ownership and packaging-optimized 2D/3D performance, while KLA, dominant overall, is sometimes less specialized for the hardest HBM and hybrid bonding steps. Onto shows the strongest Rule of X at the lowest cash-flow multiple. x.com
KLA's post-earnings selloffs are unjustified: its China issue is well known, and the company has disclosed no substantial change, positive or negative. Unless something highly damaging is announced, gaps down are buying opportunities, with shares nearing an all-time high. After its second-quarter report, KeyBanc saw a modest beat and a slightly above-consensus outlook, while Evercore ISI said supply-driven lead times may cap first-half upside. x.com
Semiconductor equipment makers such as Applied Materials, KLA and Lam Research look like shorts, a view Michael Burry now shares: per @zerohedge, Burry says he shorted Applied Materials, along with Tesla, Nvidia and, for the first time, Caterpillar. x.com
ASML has strong fundamentals, but other setups now offer better risk-reward, so most of the position accumulated through 2025 has been sold and the capital rotated elsewhere. x.com
KLA looks cheap against its earnings: at 30x next year's earnings versus the roughly 38x chip-equipment makers usually get, it sits about 9% below the low end of a $224–$285 fair range. That range is 38x next year's $6.71 EPS, give or take 12%, and leans on the forecast, which is 83% above trailing earnings; on trailing earnings it trades at 56x. This is a valuation read only, with no fundamental work. x.com
MKS looks undervalued at 13.5x estimated 2027 earnings, a multiple that is probably too low. x.com
ASML's valuation does not make sense at 45-50x forward earnings unless estimates are too low by around 2x. It has always had pricing power but chosen not to exercise it; that may change, but if it does not, the multiple is hard to justify relative to other opportunities. x.com x.com
KLA gains as more complex AI chips require more inspection before they ship. 3D stacking, advanced packaging and 2nm processes multiply checks in a market KLA says it owns almost entirely. Revenue rose 29% and EPS 39%; the next-quarter revenue guide of $4.7bn exceeds the $4.54bn expected, showing the promised second-half acceleration. Overweight, $300 target. x.com x.com
ASML's valuation is almost back to its 2021 high. x.com
