LAM RESEARCH CORPORATION (LRCX) Pre-Earnings Brief

Q1: Does the June quarter revenue guidance midpoint exceed $6.6 billion, and what is the updated full-year 2026 WFE spending outlook?

Why it matters: Revenue guidance and WFE outlook are core to the investment thesis as they signal sustained AI-driven demand in wafer fab equipment spending; Lam's growth is highly leveraged to overall industry capex expansion.

Bull answer: Guidance midpoint above $6.6B with WFE raised to $145B+ with strong upside bias, indicating accelerating momentum across logic and memory.

Bear answer: Guidance midpoint at or below $6.2B with flat or lowered WFE view around $135B or less, suggesting softening demand or execution risks.

Q2: Did non-GAAP gross margin for the March quarter exceed 49.9%, and what is the expected gross margin for the June quarter?

Why it matters: Gross margin expansion reflects product mix, pricing power, and operational efficiency in a high-AI environment; sustained high margins support margin accretion and free cash flow generation central to valuation.

Bull answer: Gross margin came in at or above 50% with June guidance at 51% or higher driven by favorable mix and efficiency gains.

Bear answer: Gross margin below 49% or June guidance flat/decreasing to 49% or lower due to mix shift or cost pressures.

Q3: Does the non-GAAP operating margin for the March quarter exceed 35%, and is June guidance set to expand beyond 36.5%?

Why it matters: Operating margin is a key profitability metric showing leverage from revenue growth and cost control; continued expansion validates the thesis that Lam can deliver outsized earnings growth in a recovering WFE cycle.

Bull answer: Operating margin exceeded 35.5% with clear path to 37%+ in June from scale and R&D leverage.

Bear answer: Operating margin at or below 34% with limited or no expansion in June guidance due to higher opex or margin compression.

Q4: Did adjusted EPS for the March quarter exceed $1.47, and does June guidance midpoint exceed $1.65?

Why it matters: EPS is the primary bottom-line metric investors track for earnings power; consistent beats and raised guidance reinforce confidence in Lam's ability to compound earnings amid AI tailwinds.

Bull answer: EPS beat significantly above $1.50 with June guidance raised to $1.75+ reflecting strong execution.

Bear answer: EPS missed or in-line at $1.40 or below with June guidance flat or cut below $1.55.

Q5: What was China revenue as a percentage of total in the March quarter, and does management expect it to stay below 35% going forward?

Why it matters: High China exposure introduces geopolitical and export restriction risks that could pressure revenue and margins; keeping it contained supports a more stable, diversified growth story tied to leading-edge AI/logic demand.

Bull answer: China revenue came in below 30% with commentary that it will remain well-contained or decline as a percentage amid strong non-China AI demand.

Bear answer: China revenue exceeded 40% or expected to rise, highlighting increased dependency and potential regulatory risks.

Q6: Is customer support business revenue on track to exceed $2 billion per quarter sustainably, and what is the installed base growth commentary?

Why it matters: High-margin, recurring customer support revenue from the growing installed base provides visibility and stability; strong growth here underpins the long-term investment thesis beyond cyclical systems sales.

Bull answer: Customer support exceeded $2B with commentary on accelerating installed base growth and services penetration driving multi-year visibility.

Bear answer: Customer support below $1.8B or limited growth commentary, signaling slower installed base expansion or competitive pressures.