KLAC Plummets 4.19% Amid Sector-Wide Turbulence: What's Fueling the Selloff?

Summary
• KLA Corporation (KLAC) trades at $1,172.09, down 4.19% from its previous close of $1,223.37
• Intraday range spans $1,170.45 to $1,233.00, reflecting volatile session
• Semiconductors sector grapples with AI-driven demand vs. supply constraints
• Lam Research (LRCX), sector leader, declines 5.17%, amplifying sector jitters

KLAC’s sharp intraday drop has ignited scrutiny as the semiconductors sector navigates a crossroads between AI-driven demand and supply bottlenecks. With the stock trading near its 52-week low of $551.33 and a dynamic P/E of 34.34, investors are dissecting whether this correction signals a cyclical reset or a deeper structural shift. The sector’s broader struggles—exemplified by LRCX’s 5.17% decline—underscore the fragility of momentum in an industry already teetering on overextension.

Sector-Wide AI Supply Chain Strains Spill Into KLA’s Shares
KLAC’s 4.19% intraday decline aligns with broader semiconductor sector pressures stemming from AI-driven demand outpacing supply. Recent sector news highlights a critical mismatch: while global semiconductor sales surged 18.9% in H1 2025, memory chip shortages—particularly DRAM and HBM—threaten to bottleneck AI infrastructure. China’s aggressive AI chip production expansion and U.S. export controls further complicate supply dynamics. KLAC, a key player in wafer fabrication equipment, faces dual headwinds: near-term demand volatility from AI clients and long-term uncertainty over global chipmaking capacity. The stock’s pullback to $1,172.09—just 0.1% above its intraday low—reflects investor caution as the sector grapples with these structural challenges.

Semiconductors Sector in Retreat: LRCX’s 5.17% Drop Amplifies KLAC’s Weakness
KLAC’s 4.19% decline mirrors the broader semiconductor sector’s struggles, with Lam Research (LRCX) leading the selloff at -5.17%. Both stocks face similar headwinds: AI-driven demand for advanced packaging and wafer fabrication equipment is outpacing supply chain capacity. LRCX’s steeper drop suggests heightened sensitivity to near-term order cancellations or margin pressures, while KLAC’s relative resilience—trading 4.19% below its 52-week high—points to stronger long-term positioning in critical manufacturing tools. However, the sector’s synchronized decline underscores systemic risks, including U.S.-China tech tensions and memory chip shortages, which could prolong the correction.

Navigating KLAC’s Volatility: Technicals and Sector Dynamics
• 200-day average: $914.91 (well below current price)
• RSI: 66.89 (neutral, not overbought)
• Bollinger Bands: Lower band at $1,092.49 (KLAC trading 7.5% above)
• 30D MA: $1,184.14 (KLAC at -1.03%)
• Support/Resistance: 30D support at $1,222.33; 200D support at $884.57

KLAC’s technical profile suggests a short-term bearish bias despite its long-term bullish trend. The stock is trading near its 30-day moving average ($1,184.14) but remains 7.5% above the lower Bollinger Band, indicating potential for a pullback toward key support levels. With RSI at 66.89, the stock isn’t overbought, but its proximity to the 200-day average ($914.91) raises concerns about a deeper correction. Investors should monitor the $1,170.45 intraday low as a critical support level; a break below this could trigger a test of the 200D MA. Given the sector’s fragility and KLAC’s exposure to AI-driven demand, a defensive approach—focusing on stop-loss orders near $1,150—is prudent.

Backtest KLA Stock Performance
The backtest of KLAC's performance after an intraday plunge of -4% from 2022 to now shows mixed results. While the stock experienced a maximum return of 4.77% within 30 days of such events, the overall short-term performance was lackluster, with the 3-day and 10-day return being -0.32% and 0%, respectively. This suggests that while KLAC had occasional bouncebacks, it largely remained in a consolidation phase following the significant intraday dip.

KLAC at Crossroads: Watch $1,170 Support and Sector Sentiment Shifts
KLAC’s 4.19% intraday decline reflects the semiconductor sector’s struggle to balance AI-driven demand with supply constraints. While the stock’s long-term bullish trend (K-line pattern) remains intact, its short-term technicals—particularly the 7.5% gap above the lower Bollinger Band—suggest vulnerability to further downside. Investors should closely monitor the $1,170.45 support level and the sector leader LRCX’s -5.17% move as barometers of broader market sentiment. A break below $1,170 could accelerate a test of the 200-day average at $914.91, while a rebound above $1,222.33 might signal a short-term bottom. Given the sector’s exposure to geopolitical and supply chain risks, a cautious stance with tight stop-losses is warranted. Action: Watch $1,170 support and LRCX’s performance for directional clues.