KLA (NasdaqGS:KLAC) Sees 12% Price Drop Over Last Quarter Amid Strong Earnings

Amidst a turbulent quarter marked by tariff-induced global market downturns, KLA (NasdaqGS:KLAC) saw a 12% decline in its share price. Despite strong quarterly earnings showing revenue and net income growth, broader market pressures and sector-specific challenges impacted its stock performance. The announcement by President Trump of sweeping tariffs led to a bearish market, with major indices like the Nasdaq entering a bear market, and this undoubtedly put pressure on KLA's share price. Additionally, KLA's substantial share repurchase program concluded, yet it didn't offset the prevailing market negativity driven by escalating trade tensions.

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The company's shares have seen a significant increase of 308.04% in total returns including dividends over the past five years. During this period, KLA has capitalized on rising demand within the advanced memory and AI sectors, which amplified their revenue potential significantly. This demand surge has facilitated notable growth in their services business, bolstering both revenue and cash flow. Despite facing headwinds from new U.S. export controls that potentially impacted Chinese revenue, the anticipated demand in high-bandwidth memory and AI-driven markets played a pivotal role in driving KLA's long-term success.

Additionally, KLA has actively returned capital to shareholders through hefty share buybacks and consistent dividend payments, with recent dividends increasing from US$1.45 to US$1.70 per share. The company repurchased a total of approximately 16.49 million shares as part of their buyback initiatives by the end of 2024, indicating a substantial commitment to enhancing shareholder value over time. These strategic financial management efforts coupled with robust earnings growth have instilled confidence in the market, reflected in their total return performance surpassing many peers and market benchmarks over the past year.

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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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