KLA Corp Stock Fails To Capitalize Morgan Stanley Upgrade Amid Broader Market Weakness – Retail Sentiment Dips

KLA Corp. (KLAC) shares fell more than 1% in midday trading Monday amid a broader market sell-off, failing to capitalize on an upgrade from Morgan Stanley.

According to TheFly, the brokerage raised its rating on the stock to ‘Overweight’ from ‘Equal Weight’ and lifted its price target to $870 from $748. The new target implies a potential 30.6% upside from current levels.

Markets came under pressure on Monday as traders braced for the impact of Wednesday's rollout of Trump’s tariffs.

According to TheFly, Morgan Stanley expects KLA to outpace the wafer fabrication equipment (WFE) market in 2025 and 2026, citing a “rich catalyst path for a re-rating” of the stock. 

The brokerage believes KLA’s process control intensity is set to rise structurally, driven by larger die sizes and increased design starts, which contribute to lower yield.

Morgan Stanley also believes KLA should continue to gain market share in process control, highlighting the company’s ability to be an early mover in major industry shifts, possessing the fundamental technology to enable that, and the data processing capabilities to keep customers.

KLA Corp. retail sentiment and message volume on March 31 as of 12:30 p.m. ET | Source: Stocktwits

On Stocktwits, retail sentiment around KLA’s stock dipped to ‘bearish’ from ‘neutral’ a day ago, accompanied by chatter increasing to ‘high’ from ‘normal’ levels. 

Morgan Stanley’s upgrade followed a downgrade from Jefferies, which lowered its rating on KLA to ‘Hold’ from ‘Buy’ and cut its price target to $725 from $875. 

The move was part of Jefferies’ broader reassessment of the WFE semiconductor sector ahead of first-quarter (Q1) earnings.

Jefferies expects a recovery in DRAM and the early stages of a NAND rebound, albeit from a low base. 

However, the brokerage believes that growth in leading-edge technology is already reflected in KLA’s valuation, given that the stock trades at the highest multiple among peers and has the greatest exposure to China.

Of the 27 analysts covering the stock, 16 rate it as a ‘Buy’ or ‘Strong Buy,’ while 11 maintain a ‘Hold’ rating, according to Koyfin. The stock’s average price target stands at $818.64, suggesting a potential 24% upside.

KLA shares have declined more than 4% over the past 12 months but have gained nearly 5% in 2025.

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