KLA Corporation Surges 2.65%—What’s Fueling This Pre-Earnings Rally?

Summary
• KLA (KLAC) reports Q4 fiscal 2025 earnings on July 31, with $3.075B revenue guidance.
• Non-GAAP EPS of $8.53 expected, matching consensus and up 29.24% YoY.
• $5B share buyback program announced, signaling board confidence in valuation.

KLAC’s shares surged 2.65% to $926.04 in post-market trading, trading between $915.00 and $931.94. The move coincides with heightened anticipation for its Q4 results and bullish guidance for advanced packaging and AI-driven semiconductor demand. With tariffs and tax reforms posing headwinds, the stock’s momentum suggests a strategic pivot to capitalize on AI infrastructure tailwinds.

Pre-Earnings Optimism and AI-Driven Growth
KLAC’s intraday rally stems from a confluence of factors: robust revenue guidance for Q4 fiscal 2025 ($3.075B ± $150M), a $5B share repurchase program, and bullish commentary on AI-driven demand. The company’s advanced packaging segment, expected to grow from $550M in 2024 to $850M in 2025, positions it as a key beneficiary of AI infrastructure expansion. While tariffs and Pillar 2 tax reforms weigh on margins, the stock’s surge reflects investor optimism about its ability to offset these costs through revenue growth and operational leverage.

Semiconductor Equipment Sector Gains Momentum
Applied Materials (AMAT), the sector leader, gained 2.28% intraday, aligning with KLAC’s rally. Both stocks benefit from sustained demand for advanced semiconductor manufacturing tools, driven by AI and leading-edge logic node development. However, KLAC’s sharper move reflects its stronger near-term guidance and advanced packaging focus, distinguishing it from peers.

Capitalizing on Earnings Volatility: ETFs and Options
• 200-day MA: 732.84 (well below current price), signaling long-term bullish trend
• RSI: 45.47 (neutral, no overbought/oversold signals)
• MACD: 13.99 (bullish), Signal Line: 22.05 (bearish), Histogram: -8.06 (diverging bearish)
• Bollinger Bands: Price at 926.04 near upper band (948.87), indicating overbought pressure

KLAC’s price action suggests a short-term bearish correction within a long-term bullish trend. Key levels to watch: 30D support at 892.12 and 200D resistance at 663.23. While leveraged ETF data is unavailable, investors should consider short-term options to hedge earnings volatility.

Top Options:
1. KLAC20260320C950 (Call)
- Strike Price: 950
- Expiration: 2026-03-20
- Delta: 0.008461 (low sensitivity to price changes)
- Gamma: 0.012958 (moderate sensitivity to price movement)
- Theta: -0.001294 (slow time decay)
- Implied Volatility: 0.24% (extremely low)
- Turnover: 0 (no liquidity)
- LVR: 184,720% (abnormal leverage)
Why it stands out: This call option is highly leveraged but suffers from zero turnover and negligible implied volatility, making it unsuitable for execution.

2. KLAC20260320C950 (Call) – Duplicate entry with identical parameters as above.
Why it stands out: No actionable insight due to identical parameters and lack of liquidity.

Trading Setup: Given KLAC’s proximity to its 52W high ($945.87) and bearish MACD divergence, a cautious approach is warranted. Aggressive bulls may consider the 950C call if the stock breaks above $948.87, but liquidity constraints in the options chain limit practicality. A better strategy: monitor the 30D support at 892.12 and 200D resistance at 663.23 for directional clues ahead of earnings.

Payoff Estimation: A 5% upside to $972.34 would yield a call option payoff of $22.34 per contract (ST - K = 972.34 - 950). However, the lack of liquidity in the options chain negates this scenario’s feasibility.

Backtest KLA Stock Performance
The backtest of KLAC's performance after an intraday surge of at least 3% indicates positive short-to-medium-term gains, with win rates and returns increasing across various time frames:These results suggest that KLAC tends to exhibit bullish momentum following a significant intraday surge, making it a potentially favorable entry point for investors looking to capitalize on short-to-medium-term price appreciation. However, it's important to note that while the win rates and returns are generally positive, there are instances where the stock may not perform well in the immediate aftermath of the surge, highlighting the need for careful risk management and consideration of broader market conditions.

Position for Earnings Volatility—Here’s How to Capitalize
KLAC’s rally reflects optimism around its AI-driven growth and Q4 guidance, but technical indicators suggest a short-term bearish correction. Investors should focus on key levels—30D support at 892.12 and 200D resistance at 663.23—to gauge momentum. The sector leader, Applied Materials (AMAT), gained 2.28%, reinforcing the semiconductor equipment sector’s strength. For immediate action: watch for a breakdown below 892.12 to trigger defensive positioning, or a breakout above 948.87 to validate bullish sentiment. With earnings on July 31, volatility is inevitable—stay nimble and prioritize liquidity in options strategies.