By the end of last week, Applied Materials (AMAT) and Lam Research (LRCX) were down 34% and 22% year to date, respectively, Nomura Instinet analyst Romit Shah tells investors in a research note. The selloff reflects deteriorating capital expenditure fundamentals that were visible starting in April, Shah adds. The analyst believes Semiconductor Capital Equipment fundamentals today "are still pointing south" as he does see DRAM capacity expansion in 2019 and thinks NAND flash "has further cancellation risk." Shah lowered his price target for Buy-rated Applied Materials to $50 from $60, Neutral-rated KLA-Tencor (KLAC) to $110 from $120 and Buy-rated Lam Research to $200 from $225.

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Sees Q4 revenue $2.5B, +/- $125M, consensus $2.42B.

Reports Q3 revenue $2.36B, consensus $2.31B. "KLA's March quarter results were above our adjusted guidance as customer demand and company execution tracked consistent with our expectations," said Rick Wallace, president and CEO, KLA Corporation. "As we have highlighted over the past few quarters, market conditions have stabilized and we expect our business levels to improve as we progress through the year. We are encouraged by the improvement in our customers' businesses across multiple end markets and this improvement is translating into constructive discussions with our customers about future opportunities for leading edge capacity investments."