Lam Research (LRCX) Surprises with Q4 Earnings Beat, Shares Fall
Lam Research (LRCX) reported revenue of $5.17B, up 33.6% YoY and 9.6% QoQ, and non-GAAP EPS of $1.33, which beat estimates (~$0.88–$0.90).
GAAP EPS came in at $1.35, up 73.1% YoY.
Gross and operating margins expanded slightly, both on GAAP and non-GAAP bases.
Profitability and Margins
-
Non-GAAP gross margin: 50.3% (vs. 49.1% prior)
-
Non-GAAP operating margin: 34.4% (vs. ~32.8%)
-
Free cash flow and cash reserves improved; cash rose to $6.4B
Balance Sheet Details
-
Deferred revenue: $2.68B (up from $2.37B QoQ), including ~$342M in Japan shipment-related deferrals
-
Committed to returning over 85% of free cash flow through buybacks/dividends
Guidance: Strong Start to FY2026
-
Q1 FY2026 revenue: $5.20B ± $300M (~10% above street estimates)
-
EPS: $1.20 ± $0.10, with margins expected flat at 50% gross / 34% operating
-
Signals confidence in advanced node demand and capex resilience
Operational Highlights
CEO Tim Archer emphasized growth from AI-fueled etch and deposition demand.
Notable traction from new tools: Halo ALD Moly and SABRE 3D, supporting logic/foundry upgrades.
China Exposure: A Risk Not Ignored
~35% of revenue tied to China—a strategic advantage for now, but a valuation headwind given export control uncertainties.
Investors appear cautious despite the strong print and outlook.
Stock Performance
-
July 31, 2025 trading:
Opened: $91.25
High: $95.57
Low: $90.50
Closed: $94.84 (–4.33%) -
After hours: $94.35 (–0.52%)
Peer Context
Lam ranks behind Applied Materials (AMAT) and KLA (KLAC) but is showing faster near-term earnings momentum.
Its IBD composite rating rose to 96, reflecting strong technicals and earnings revisions.
Bottom Line
Lam’s execution is strong, with expanding margins, rising cash, and robust demand visibility from AI and foundry cycles.
But investor skepticism around China is real and may continue to cap upside in the near term—even as peers with lower China exposure trade at higher multiples.
Execution remains solid, but geopolitical risk casts a shadow.