Lam Research Corporation (LRCX) | The Buildout — AI Infrastructure
The Verdict
Lam Research makes etch, deposition, and wafer-cleaning tools that semiconductor manufacturers use to fabricate advanced logic, DRAM/HBM, and NAND chips. Those chips sit at the core of AI data centers. As AI compute and storage demand rises, chipmakers add more etch and deposition steps per wafer, making Lam's tools more important to every new fab and node transition.
| Market Cap | — |
| Revenue (TTM) | $23.2B |
| Revenue Growth | +26.0% |
| EBITDA Margin (TTM) | 37.2% |
| Net Cash | $1.8B |
| Earnings Beats | 7 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Management raised 2026 WFE outlook to $140B with upside bias, up from $135B, and described 2027 as another year of compelling WFE growth.
- NAND conversion spend of roughly $40B is being pulled forward, with the majority expected before end of calendar 2027.
- Stryker ALD is the tool of record at all leading memory makers for bitline spacer applications; Lam sees total dielectric deposition SAM in DRAM growing more than 20% as the industry moves to 1C.
- CSBG crossed $2B for the first time in March at $2.1B, up 25% YoY, over an installed base of more than 100,000 chambers.
- Advanced packaging revenue growth is expected to exceed 50% in CY2026, raised from prior >40%.
What We’re Watching
- Customer down payments fell roughly $300M sequentially to the lowest level in nearly four years; management attributes the decline to customer mix.
- China was 34% of March revenue and is expected to decline in the June quarter, leaving export-control risk as an overhang.
- Management acknowledged lead times are stretching but declined to quantify the constraint.
- Lam has not quantified 2027 WFE; the long-term model update is promised later in 2026.
The thesis is strengthening on raised WFE, pulled-forward NAND conversion, record CSBG, and first dielectric etch wins at a key foundry/logic manufacturer. The main caution is that demand is running ahead of physical capacity. The open question is whether customer down payments stabilize as China mix declines, or signal a broader demand air pocket.
Earnings Beat
Lam Research reported June-quarter revenue of $6,722.2 million, up 15.1% sequentially from $5,841.5 million. Gross margin was 51.7%. EBITDA was $2,633.1 million, or 39.2% of revenue, with net income of $2,277.3 million.
| Metric | Q4 FY2026 | Q3 FY2026 | Q4 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $6.7B | $5.8B | $5.2B | +30.0% |
| Gross margin | 51.7% | 49.8% | 50.1% | +160bps |
| EBITDA | $2.6B | $2.2B | $1.8B | +43.1% |
| EPS | $1.81 | $1.45 | $1.35 | +34.1% |
Management tone: No earnings call on record for the latest period.
Management Guidance
No guidance was issued.
Trajectory
Revenue stepped up from $5,345M in December to $5,842M in March and $6,722M in June, with the data spine still labeling the full revenue trajectory decelerating. Gross margin reached 51.7% and EBITDA margin 39.2% in the June quarter. Management attributes the margin expansion to structural factors, while cleanroom availability, lead times, and component shortages cap near-term revenue and push some 2026 demand into 2027.
The Model
The model projects FY+1 revenue of $29,500M and EBITDA of $11,534M (39.1% margin), rising to FY+2 revenue of $33,500M and EBITDA of $13,333M (39.8% margin). The near-term anchor is the raised 2026 WFE outlook of $140B and the pulled-forward NAND conversion spend; FY+2 is driven by 2027 WFE growth, advanced packaging growth above 50%, and the second Malaysia facility adding capacity.
| Metric | FY2026 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $23.2B | $29.5B | $33.5B |
| YoY Growth | — | +27.0% | +13.6% |
| EBITDA | $8.6B | $11.5B | $13.3B |
| EBITDA Margin | 37.2% | 39.1% | 39.8% |
Projections are the median of 5 independent model runs. The model’s revenue sits 8.0% below analyst consensus.
No guidance was issued.
What Could Go Right — and Wrong
- 2026 WFE lands at or above the $140B management outlook with its stated upside bias.
- The majority of the roughly $40B NAND conversion spend arrives before end of calendar 2027, and greenfield orders follow.
- Advanced packaging revenue grows more than 50% in CY2026, with copper plating, TSV etch, and PECVD underfill all contributing.
- The first dielectric etch wins at the key foundry/logic manufacturer scale into follow-on etch tools.
- CSBG sustains near the record $2.1B quarterly level or slightly higher, with Equipment Intelligence and Dextro expanding recurring revenue.
- Customer down payments continue to decline and turn out to be more than a customer-mix shift.
- Export-control tightening on China disrupts a region that was 34% of March revenue.
- Supply-chain and cleanroom bottlenecks push revenue out of 2026, creating lumpiness against guidance.
- NAND conversion spending slips beyond the end of calendar 2027.
- Applied Materials or Tokyo Electron takes share in etch, or the first dielectric etch win does not scale.
Looking Ahead
The next 12 months hinge on whether Lam can convert raised demand into shipped systems amid cleanroom and tool lead-time constraints. The second Malaysia manufacturing facility is expected online in 2H 2026, and new greenfield fab openings later in 2026 through 2027 are the next demand step. A long-term financial model update later in 2026 is expected to clarify management's structural margin and SAM targets.
- 2H 2026Second Malaysia facility online — Adds capacity roughly the same size as first Malaysia plant; supports 2027 demand.
- Later 2026Long-term financial model update — Management promised an update; current performance is above the prior model.
- CY2026Advanced packaging growth above 50% — Tests copper plating, TSV etch, and PECVD underfill momentum.
- 2027Greenfield fab shipments begin — Lam prepares for new fab openings and greenfield shipments later 2026 through 2027.
- Before end CY2027NAND conversion majority spend — Confirms the pulled-forward NAND conversion timing.
- 2028Customer fab openings referenced — Tooling decisions for customer fabs with 2028 openings.
Financials
Annual Summary
| Metric | FY2025 | FY2026 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $18.4B | $23.2B | $23.2B | +26.0% |
| Gross Margin | 48.6% | 50.4% | 50.4% | +175bps |
| EBITDA | $6.3B | $8.6B | $47.0B | +37.4% |
| EBITDA Margin | 34.1% | 37.2% | 37.2% | +309bps |
| Net Income | $5.4B | $7.3B | $7.3B | +35.6% |
| Free Cash Flow | $5.7B | $4.9B | $34.4B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)50.4%
- EBITDA Margin (TTM)37.2%
- Net Margin (TTM)31.3%
- ROIC61.0%
- FCF Conversion56.6%
- SBC / Revenue1.7%
The Company
Lam Research is a global supplier of wafer fabrication equipment and services. Its disclosed product families include SABRE electrochemical deposition, ALTUS CVD/ALD, VECTOR PECVD, Kiyo and Flex etch, and the Reliant refurbished line. These tools are used to build advanced logic, DRAM/HBM, and NAND chips for AI data centers. The 10-K says Lam operates in one reportable business segment: manufacturing and servicing wafer processing semiconductor manufacturing equipment.
The company's principal R&D and operating sites are in Fremont and Livermore, California; Tualatin, Oregon; Yongin, Korea; Bengaluru, India; and Salzburg and Villach, Austria. Manufacturing and warehouse sites are in California, Ohio, Oregon, Austria, Korea, Malaysia, and Taiwan. A second Malaysia facility is expected online in 2H 2026, roughly the same size as the first, which management described as the largest factory in Lam's network.
Business Segments
Competitive Landscape
The 10-K identifies Applied Materials across dielectric and metals deposition, ALD/PECVD, and etch; ASM International and Wonik IPS in ALD/PECVD; Hitachi and Tokyo Electron in etch; and Screen Holding, Semes, and Tokyo Electron in wet clean. On the April call, Lam cited first dielectric etch wins at a key foundry/logic manufacturer and Stryker ALD as tool of record at all leading memory makers for bitline spacer applications.
- Applied MaterialsNamed in the 10-K for deposition, ALD/PECVD, and etch; neighbor read-through notes AMAT expects >30% equipment growth in CY2026.
- Tokyo ElectronNamed in the 10-K for etch and wet clean.
- ASM InternationalNamed in the 10-K for ALD and PECVD competition.
- Wonik IPSNamed in the 10-K for ALD and PECVD competition.
- HitachiNamed in the 10-K for etch competition.
Supply Chain
Lam sits between component and subassembly suppliers and the world's largest chipmakers. Verified suppliers Ichor and Ultra Clean Holdings each count Lam as a 10%-plus customer, and UCTT referenced Lam's $40B NAND conversion on its call.
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