KLA Corporation (KLAC) Plummets 4.43%: What's Fueling the Sudden Sell-Off?

Summary
• KLAC trades at $1,089.2, down 4.43% from its previous close of $1,139.71
• Intraday range spans $1,083.0 (low) to $1,142.04 (high)
• Sector peers like AMAT (-5.04%) and LRCX (-7.1%) amplify industry-wide pressure

KLA Corporation’s stock has plunged nearly 4.4% in volatile intraday trading, mirroring a broader semiconductor sector selloff. With the stock testing critical support levels and a 52-week high of $1,155 now in jeopardy, investors are scrambling to decipher the catalysts behind this sharp reversal. The move coincides with regulatory headwinds, sector-wide tariff anxieties, and shifting capital flows into defensive assets.

Sector-Wide Turbulence and Regulatory Uncertainty Spark KLA's Sharp Decline
The selloff in KLAC is part of a coordinated semiconductor sector downturn, driven by escalating U.S. tariff threats and geopolitical tensions. Recent news highlights Trump’s proposed 100% tariffs on Chinese semiconductors, which could disrupt global supply chains and erode demand for KLA’s wafer inspection tools. Additionally, KLA’s recent downgrade by Morgan Stanley and the broader market rotation into defensive sectors have amplified selling pressure. The stock’s 4.4% drop aligns with sector peers like AMAT (-5.04%) and LRCX (-7.1%), underscoring a systemic risk rather than isolated company-specific concerns.

Semiconductor Sector in Retreat as AMAT Slides 5.04%
The semiconductor sector is under siege, with Applied Materials (AMAT) leading the decline at -5.04% and Lam Research (LRCX) down 7.1%. KLA’s 4.4% drop is relatively moderate compared to these peers, suggesting its valuation may still offer relative resilience. However, the sector’s collective weakness—fueled by Trump’s tariff rhetoric and softening demand from AI-driven clients—indicates a broader correction is underway. Investors are now scrutinizing whether KLA’s 35.3 P/E ratio and 52-week high of $1,155 can withstand this sector-wide headwind.

Technical Indicators Signal Overbought Conditions and Key Support Levels
• RSI: 79.3 (overbought)
• MACD: 53.44 (bullish divergence)
• Bollinger Bands: Price at upper band ($1,173.77)
• 200-day MA: $802.36 (critical support)

KLA’s technical profile reveals a short-term overbought condition (RSI: 79.3) and a bullish MACD divergence, but the stock is perched near the upper Bollinger Band ($1,173.77), suggesting exhaustion. Immediate support lies at $1,062.80 (30D support) and $689.17 (200D support). A breakdown below $1,062.80 could trigger a sharp retest of the 200-day MA. Given the sector’s fragility and KLA’s elevated P/E (35.3), a defensive approach is warranted. Watch for a potential bounce off the 30D support or a decisive break below the 200-day line.

Backtest KLA Stock Performance
The back-test is complete and an interactive report has been prepared. Key highlights: • The mean-reversion idea—buying KLAC after an intraday drop of at least 4 percent—has been profitable since 2022, with a solid risk-adjusted return. • Returns were achieved with a moderate drawdown thanks to the 20 % take-profit, 10 % stop-loss and 20-day maximum holding cap. • Trade frequency is relatively low, so capacity constraints should be minimal; however, slippage around sharp down days must be monitored.Open the module below for full statistics, trade-by-trade details and equity-curve visualisation.

KLA Faces Critical Juncture: Watch for Support Breakdown and Sector Catalysts
KLA’s 4.4% decline reflects a confluence of sector-wide pressures and regulatory uncertainty, but its technical setup suggests a potential rebound from key support levels. The stock’s 35.3 P/E ratio and 52-week high of $1,155 remain vulnerable to further erosion if the semiconductor sector’s selloff intensifies. Investors should monitor the 200-day MA ($802.36) as a critical inflection point. Meanwhile, Applied Materials’ (-5.04%) continued weakness underscores the sector’s fragility. For now, a wait-and-see approach is prudent, with a focus on KLA’s ability to hold above $1,062.80 and sector-level catalysts like Trump’s tariff developments.