KLA Corp., the maker of inspection equipment for the semiconductor industry, may seem like a guaranteed artificial-intelligence winner. But as shares head for their worst month since October 1987, that narrative is quickly unraveling.

Like shares of sector peers, KLA has slumped amid profit-taking this month. However, lofty market expectations are doing the company no favors. Although fiscal fourth-quarter earnings broadly beat expectations, the numbers failed to impress Wall Street, with Needham analysts noting Wednesday that KLA delivered a "decent quarter, but the bar was higher."

The company's foundry and logic division remained its main growth engine, driving revenue 7% higher from the prior quarter to $3.66 billion and outpacing analysts' calls for $3.61 billion. Adjusted earnings, too, beat expectations. KLA reported earnings of $1.05 a share, ahead of the $1 Wall Street had projected.

Jefferies analyst Blayne Curtis noted that while results came in "modestly ahead" of analysts' expectations, they were nevertheless below fellow makers of semiconductor process equipment industry on a relative basis.

Shares slid 5.7% following the report.

KLA has shed nearly 38% month to date, putting it on track for its worst performance in nearly 39 years, according to Dow Jones Market Data. Industry peers Applied Materials and Lam Research were down 4.2% and 2.5%, respectively, on Wednesday.

CEO Rick Wallace indicated that momentum should return to the business in the second half of the calendar year into 2027 after multiple quarters of underperformance. The trends driving the company's growth "are strengthening," Wallace asserted late Tuesday.

For the current quarter, KLA sees revenue between $3.8 billion and $4.2 billion and adjusted earnings of $1.06 to $1.26 a share. Wall Street is slightly more cautious. Analysts are looking for $3.93 billion and $1.14 billion, respectively -- below the midpoint of each range.

Evidently, management's upbeat commentary isn't swaying many analysts. Susquehanna's Mehdi Hosseini reiterated a Neutral rating on the shares in a note Wednesday. Both Needham and Oppenheimer rate the stock Buy.

While Hosseini acknowledged that "execution remains solid," the analyst sees limited opportunity for KLA's systems business to outpace the broader wafer fab equipment market. He believes the company is unlikely to top its profit margin target of roughly 62% for the current quarter, leaving him sidelined on the shares for now.

Including Wednesday's slump, KLA has surged 50% this year and nearly doubled over the past 12 months. The tech-heavy Nasdaq 100 has gained 9.2% and 18%, respectively, over the same periods.