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what it is
Lam Research builds machines that help chipmakers deposit, etch, and clean the layers inside computer chips.
how it gets paid
Last year Lam Research made $18.4B in revenue. deposition systems was the main engine at $6.8B, or 37% of sales.
why it's growing
Revenue grew 23.7% last year. A good part of this should be driven by ai-related demand for leading-edge logic chip design.
what just happened
Lam posted $5.3B in sales and $1.24 a share as margins stayed unusually fat.
At a glance
A balance sheet — strong enough to weather a downturn
70/100 earnings predictability — reasonably predictable
39.2x trailing p/e — you're paying up for this one
0.6% dividend yield — cash in your pocket every quarter
35.0% return on capital — every dollar works hard here
xvary composite: 82/100 — above average
What they do
Lam Research builds machines that help chipmakers deposit, etch, and clean the layers inside computer chips.
Lam sells the tools that make chips smaller. That sounds ordinary. It is not. When 93% of sales come from outside the U.S., your business is tied to every major chip region, and leaving costs real money and real downtime.
How they make money
$18.4B
annual revenue · their business grew +23.7% last year
deposition systems
$6.8B
+16.0%
etch systems
$5.6B
+14.0%
customer support and spares
$2.8B
+9.0%
clean systems
$2.5B
+11.0%
software and other services
$0.7B
+5.0%
The products that matter
builds chipmaking equipment
Wafer Fabrication Equipment
$10.7B revenue
It's the whole business in this snapshot: $10.7B of revenue tied to the tools semiconductor manufacturers need to produce chips at scale.
entire business
quarterly earnings engine
Recent Quarter
$5.3B revenue · $1.26 EPS
The latest quarter came in at $5.3B of revenue and $1.26 of EPS. That's not full-cycle proof. It is enough to show why investors are paying for recovery instead of waiting for one.
rebound signal
export-control exposure
China Sales Headwind
~$200M per quarter
Management says new restrictions reduce revenue by roughly $200M each quarter. Against a $5.3B quarter, that is survivable. Against an expensive stock, it still matters.
risk that matters
Key numbers
$18.4B
annual sales
This is the size of the machine. It tells you Lam is not a niche parts seller. It is a global supplier with real scale.
34.0%
operating margin
For every $100 of sales, Lam keeps $34 before interest and taxes. That is why chip tools can print cash when demand is hot.
35.0%
return on capital
The business turns invested dollars into profit fast. That matters because capital-heavy companies usually get punished for being clumsy.
93%
foreign sales
Almost all of Lam's revenue sits outside the U.S. That makes trade rules a direct earnings risk, not a footnote.
Financial health
A
strength
- balance sheet grade A — very strong financial position
- risk rank 3 — safer than 50% of stocks
- price stability 30 / 100
- long-term debt $3.7B (2% of capital)
- net profit margin 28.9% — keeps 29 cents of every dollar in revenue
- return on equity 40% — $0.40 profit for every $1 investors have put in
A with balance sheet grade and net profit margin standing out. your money faces less risk here than at most public companies.
Total return vs. market
You invested $10,000 in LRCX 3 years ago → it's now worth $37,020.
The index would have given you $13,920.
source: institutional data · total return
What just happened
beat estimates
Lam posted $5.3B in sales and $1.24 a share as margins stayed unusually fat.
Sales rose 28% vs. prior year and earnings jumped 44%. AI-related demand helped, while China restrictions still trimmed some shipments.
$5.3B
revenue
$1.24
eps
50.0%
gross margin
the number that mattered
The $5.3B sales print mattered most because it showed demand still outpaced China headwinds by a wide margin.
-
sales were up 28% vs. prior year, to $5.3 billion, marking nine consecutive periods of sequential improvement and a company record.performance was led by strong demand for the company’s wafer fabrication equipment and services, mainly from ai-related semiconductor manufacturers.
-
meanwhile, earnings vaulted 44% vs. prior year, to $1.24 a share, thanks to the top-line gains and record margins.the solid performance appears likely to continue for the remainder of the fiscal year (ends june 28, 2026). management anticipates strong growth in global wafer fabrication equipment (wfe) spending this year.
-
a good part of this should be driven by ai-related demand for leading-edge logic chip design.
-
this should more than offset lower shipments to certain customers in china due to new restrictions.
-
altogether, the company expects this will impact revenues by roughly $200 million per quarter.
source: company earnings report, 2026
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What could go wrong
Lam's risk stack is unusually specific: a stated ~$200M quarterly China drag, a business that already showed you a 42.1% revenue drop in one year, and a stock at 39.2x trailing earnings. You are not paying for ambiguity here. You are paying for the rebound to hold.
med
China export controls
Management says new restrictions reduce revenue by roughly $200M per quarter. For a company that just reported a $5.3B quarter, that is not fatal. It is still real revenue pressure with no mystery attached.
If that drag grows or sticks around longer than expected, the rebound narrative weakens and the premium multiple looks a lot less reasonable.
med
chip-cycle volatility
Lam is still a semiconductor capital-equipment stock. Revenue fell 42.1% last year. That's what happens when customers slow spending on tools.
If wafer fab spending cools again, earnings reset quickly. A cyclical stock with a rebound multiple does not get much patience from the market.
med
valuation premium
At 39.2x trailing earnings, the stock already assumes better days ahead. The business can execute well and still disappoint if improvement stops looking exceptional.
If growth merely stabilizes instead of accelerating, the multiple can do the damage even while the company stays financially strong.
med
stock volatility
Price stability is 30 / 100 even with an A balance sheet. Translation: financially strong does not mean smooth.
You can be right on the business and still sit through ugly moves if semiconductor sentiment turns before fundamentals do.
Between a ~$200M quarterly China headwind, a business that just lived through a 42.1% revenue drop, and a 39.2x trailing multiple, this is a high-quality company with a market that already wants the next leg of the recovery.
source: institutional data · regulatory filings · risk analysis
Pay attention to
metric
China headwind vs. AI demand
Lam says restrictions cost roughly $200M per quarter. Your key question is whether AI-driven orders keep outrunning that drag.
calendar
next earnings in january
You want to see whether the $5.3B revenue run-rate and $1.26 EPS momentum keep holding.
trend
wafer fab spending through 2026
Management expects strong industry spending through 2026. If that view softens, the premium multiple usually softens with it.
risk
multiple compression
39.2x trailing earnings is generous. Good numbers help. Merely decent numbers leave less room than you think.
Analyst rankings
short-term outlook
top 5%
Momentum score 1 is the highest rating. In human-speak, analysts think this stock has better near-term price action than almost everything else.
risk profile
average
Stability score 3 means the business is solid, but the stock still trades and moves like a cyclical semiconductor name.
chart momentum
top 20%
Technical score 2 points to above-average price performance in the year ahead. Analysts like the trend. That is not the same thing as saying you are getting a bargain.
earnings predictability
70 / 100
These earnings are reasonably forecastable, just not sleepy. In a cyclical business, predictability only lasts while the cycle cooperates.
source: institutional data
Institutional activity
institutions have been net buying for 3 consecutive quarters — 1,083 buyers vs. 800 sellers in 3q2025. total institutional holdings: 1.0B shares. net buying for 3 quarters.
source: institutional data
Price targets
3-5 year target range
$106
$269
$163
current price
$188
target midpoint · +16% from current · 3-5yr high: $170 (+5% · 2% ann'l return)
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