Overview
Lam Research
LRCX · NASDAQQ1 FY2027Semiconductors · Wafer Fab Equipment
Since the Report − 7.8%
Revenue grew 54.4% year over year, EPS beat the estimate by 0.9%; the stock fell 6.1% in its first reaction.
- RevenueQ1
- $8.22B
- ▲ 54.4% Annual · 1.0% Beat
- EPSAdjusted
- $2.20
- Estimate $2.18 · 0.9% Beat
Verdict
HOLDLam Research posted record revenue, record margins and record earnings per share, but all three measures landed in line with market expectations. The stock fell more than 6% after hours; for a stock up 52% this year, in line was not enough. On the call, Lam said 2027 industry equipment spending should top $200 billion; the next thing to watch is how far China's share falls in December.
Close on Report DayOct 21
$260.81▼ 6.1%Report-Day Move
- Market Cap(Today)
- ≈ $301 B
- 1Y Return(At Report)
- + 80%
- P/E(At Today's Price · $6.76 · Trailing 12M)
- 35.6
- PEG(Next-year Estimate)
- 1.42
- Net Margin(Trailing 12M)
- 32.3%
Earnings Summary
In 30 Seconds- Revenue rose 54.4% year over year to $8.22B, but beat the market expectation by only 1.0%.
- The adjusted gross margin hit a record 52.4%, and December-quarter guidance of $8.60B is in line with estimates.
- The stock fell about 6% after hours as the size of the beat narrowed; the call's 2027 signal did not reverse the loss.
The Numbers
Adjusted Gross Margin
52.4%
Record · Up 1.8 Points Year Over Year
Adjusted Operating Margin
40.2%
Up 5.2 Points Year Over Year
Q2 Revenue Guidance
$8.60B
Estimate $8.54B · 0.7% Above
Stock Reaction
▼ 6.1%
After Hours, 6:10 P.m. ET · Post-Call
Quarterly Revenue ($ Billion)
5.32
Q1 26 · $5.32 B
5.34
Q2 26 · $5.34 B · QoQ + 0.4%
5.84
Q3 26 · $5.84 B · QoQ + 9.3%
6.72
Q4 26 · $6.72 B · QoQ + 15.1%
8.22
Q1 27 · $8.22 B · QoQ + 22.3% · YoY + 54.4%
8.2–9.0
Q2 27E · 8.2–9.0 · QoQ + 4.6% · YoY + 60.9%
- Q1 26
- Q2 26
- Q3 26
- Q4 26
- Q1 27
- Q2 27E
Q2 FY27 Company Guidance
- Revenue8.2 – 9.0 billion8.2 billion9.0 billion
Midpoint 8.60 · Market Expectation 8.54In Line ✓
- Adjusted EPS2.18 – 2.48 $2.18 $2.48 $
Midpoint 2.33 · Market Expectation 2.32In Line ✓
- Gross Margin51.5% – 53.5%51.5%53.5%
Midpoint 52.5% · Last Quarter 52.4%Flat
- Operating Margin39.5% – 41.5%39.5%41.5%
Midpoint 40.5% · Last Quarter 40.2%Flat
- 2027 Industry Equipment Spending200 billion
Preliminary · Floor · 2026 Mid-150s
How to Read the Chart
The blue band is the company's low-high range; its length shows how much room the company left itself. The black triangle and the line beneath it mark where the market expected, and the notch in the band is the range's midpoint. The triangle appears only where a market expectation is known. When the company gave a single number rather than a range and no market expectation is known, that row gets no band at all: there is no length to measure and no position to compare. Axis is ±7.4% around the midpoint.
Segment and KPI Data
Revenue by Segment
- Systems$5.73 BShare 69.7%▲ 61.6% YoY
New leading-edge equipment sales
- Customer Support and Other$2.49 BShare 30.3%▲ 40.0% YoY
Services, spares and upgrades
Key Metrics
Operating Cash Flow
$3.50 B
▲ 96.6% YoYPress Release
Deferred Revenue
$2.66 B
Press Release
China Revenue Share
35.0%
Press Release
Share Buybacks
$1.02 B
Press Release
Japan Shipments Awaiting Acceptance
$468 M
Press Release
Dividend Per Share
$0.33
Press Release
Shares are computed over the segment total: $8.22 B. Source: Press Release.
Metrics come only from the company's own filings; each one names the document it was taken from.
“Our preliminary 2027 WFE outlook is for more than $200 billion of spending.”
- 2027 Spending Above $200B
- Record Memory Share
- China Share to Decline
Summary and Review
Summary
Lam Research reported revenue of $8.22 billion for the quarter ended in September. That is up 54.4% year over year. Revenue beat the $8.14 billion market expectation by only 1.0%. Adjusted earnings per share were $2.20, 0.9% above the $2.18 estimate. Earnings grew 74.6% year over year. Revenue guidance of $8.60 billion for the December quarter is 0.7% above expectations. All three gates sit in the in-line zone; none opened clearly.
The stock closed at $260.81 and slipped to $245 after hours. That is a loss of roughly 6%; in the first minutes the drop neared 8%. During the session the price had ranged between $259 and $271. The market read this report not as a growth story but as an expectations story. The stock had gained 80% over the past year. At that valuation, simply meeting estimates was not enough. Investors were looking for a wider beat and a higher outlook.
The score is 62 and the view is hold. The quality of the quarter is high: the adjusted gross margin hit a record 52.4%, and operating margin widened 5.2 points year over year. But the decision table is clear; three in-line gates fall in the 50-64 band. A gate would open only with a gap above 2%. Margin strength keeps the score in the upper half of that band. The call's 2027 signal was strong, but the stock did not recover its after-hours loss.
Full Review
Revenue landed in line with estimates.
Revenue was $8.22 billion. That is up 22% from the prior quarter and 54.4% year over year. In July, the company guided to a midpoint of $8.10 billion for this quarter. Actual revenue came in 1.5% above that midpoint. EPS also beat the company's $2.15 midpoint by 2.3%. Earnings rose 74.6% year over year. Revenue landed in the upper half of the range. The market expectation was $8.14 billion, a gap of 1.0%. Over the past four quarters, Lam beat EPS estimates by 3% to 9%. This quarter the beat shrank to 0.9%. A narrower beat breaks the pattern investors had grown used to. The story did not change, but the surprise margin narrowed. For a richly valued stock, that detail carries weight.
Margins are at a record.
The adjusted gross margin was 52.4%. It was 52.0% in the prior quarter and 50.6% a year ago. That is a 1.8-point expansion year over year. It also beat the company's July midpoint of 52.0% by 0.4 points. That shows no surprise on the cost side. The adjusted operating margin rose to 40.2%. A year ago it was 35.0%, so it widened 5.2 points. Revenue grew 54% while operating expenses rose only 19%. That shows scale flowing through to profit. Part of the margin gain comes from higher volume. When volume falls, that leverage works in reverse. December-quarter guidance calls for a 52.5% gross margin and a 40.5% operating margin. Both sit just above this quarter. The company is describing a new floor for margins, not a peak.
Systems sales carry the growth.
Systems revenue, which reflects new equipment sales, was $5.73 billion. That is up 61.6% year over year. Its share of total revenue rose to 69.7% from 66.6% a year ago. Customer support and other revenue was $2.49 billion, up 40.0%. By region, China led with 35% of revenue. Korea took 20%, Taiwan 18%, Japan 9% and the U.S. 8%. Customer support revenue rose only 0.6% from the prior quarter. Nearly all of the quarter's growth came from new equipment. China's large share keeps sensitivity to export controls alive. CEO Tim Archer said demand is coming from AI-driven semiconductor needs and rising device complexity. On the call, memory reached a record 46% of systems revenue. The company expects China's share to fall meaningfully in the December quarter.
Strong cash flow, buybacks continue.
Operating cash flow was $3.50 billion. That is up 96.6% from $1.78 billion a year ago. Capital expenditures were $258 million. The company bought back $1.02 billion of stock and paid $325 million in dividends during the quarter. Total capital return was $1.35 billion, or 39% of operating cash flow. The dividend declared in the quarter was $0.33 per share, up from $0.26 in the prior quarter. Cash and cash equivalents rose to $7.45 billion. Deferred revenue was $2.66 billion, up from $2.43 billion in the prior quarter. This line reflects shipments that will turn into revenue later. On the call, management said tight component supply delayed some shipments. Long-term debt held steady at $3.73 billion. To understand how buybacks work, see our share buyback guide.
One gauge for next quarter: systems revenue.
December-quarter guidance is $8.60 billion. That implies 60.9% growth year over year. On the call, the company put 2026 industry equipment spending in the mid-$150 billion range and 2027 above $200 billion. Next quarter, look at one line: systems revenue. If it rises above $6 billion, new fab investment is accelerating. In that case the margin story also holds. This quarter the same line was $5.73 billion. If it stays below $5.7 billion, this quarter was close to the peak of the equipment cycle. Watch China's share too; the company expects a meaningful decline in December. The second gauge is the guidance gap: if the revenue midpoint does not beat estimates by more than 2%, the stock may react as it did this quarter. This quarter that gap was just 0.7%. For a general method, see our guide on how to read earnings day.
Looking Ahead
Strengths and Risks
6 Strengths · 5 RisksStrengths
6- The adjusted gross margin of 52.4% was a company record and widened 1.8 points in a year.
- Operating margin rose to 40.2%Expenses grew 19% while revenue grew 54%.
- Operating cash flow rose 96.6% year over year to $3.50 billion.
- Systems revenue grew 61.6% year over year and its share of total revenue rose to 69.7%.
- December-quarter revenue guidance points to 60.9% growth year over year.
- The company expects 2027 industry equipment spending to top $200 billion.
Risks
5- Revenue and earnings beat estimates by only about 1%The 3-9% beats of prior quarters disappeared.
- China accounts for 35% of revenueExport controls could pull that share down quickly.
- The stock rose 80% over the past yearEven in-line results can trigger sharp selling.
- Chip equipment spending is cyclicalAfter 54% growth in a year, comparisons get tougher.
- Tight component supply delayed some shipmentsThe company expects China's share to fall meaningfully in December.
What to Watch
2- December-quarter results are due in late January 2027; guidance is $8.60 billion.
- $468 million of shipments to Japan awaiting customer acceptance will turn into revenue.
Upcoming Earnings
To Understand This