Lam Research Earnings Beat, Guides Above Forecasts

Lam Research earnings on Jan. 28, 2026 showed stronger-than-expected results, with the company forecasting third-quarter revenue above Wall Street consensus. The outlook reflected robust demand for chipmaking tools from foundries and memory makers, while management noted a China export headwind.

Quarter Results and Guidance

Lam Research reported non-GAAP earnings per share of $1.27 for the quarter ended Dec. 28, 2025, beating consensus estimates by about $0.10 to $0.12. Revenue reached $5.34 billion, up 0.4% year-over-year and exceeding estimates by roughly $100 million to $130 million.

The company set third-quarter revenue guidance at $5.7 billion, plus or minus $300 million, about 6.9% above consensus. It projected a gross margin of 49% and an operating margin of 33.9%, citing strong chipmaking tool demand as foundries ramp advanced nodes and memory makers expand capacity.

Structural Drivers and China Headwind

Systems sales, which represent about 60% of Lam’s revenue, drove the quarter’s growth. Industry models estimate Systems revenue at $3.41 billion, a 29.7% year-over-year increase fueled by foundry orders for advanced-node processors and AI/high-performance computing applications.

The transition to gate-all-around (GAA) transistors is roughly 20% more etch-intensive than the previous FinFET generation. Fabs scaling 2-nanometer capacity toward about 140,000 wafers per month by year-end are increasing per-wafer tool content, boosting demand for Lam’s selective-etch and atomic-layer-deposition equipment.

Memory trends also support tool demand. Manufacturers pushing high-bandwidth memory (HBM4) are racing to 16-layer stacks, increasing demand for high-aspect-ratio etch platforms like Cryo 3.0 and Vantex. Meanwhile, a multi-year recovery in 3D NAND toward 300-plus-layer stacks and new backside power-delivery architectures requiring wafer-thickness etching add incremental etch and deposition content per wafer.

Lam said tighter U.S. export restrictions on certain legacy semiconductor equipment will create a modeled FY2026 revenue headwind of about $600 million. The company’s China revenue exposure has declined from above 40% historically to under 30% in early 2026.

Valuation and momentum raise near-term risk for traders. The stock trades at a trailing price-to-earnings ratio near 52.8, a price-to-sales ratio near 15.7, and a relative-strength index around 72.5, indicating overbought conditions. Its beta ranges from roughly 1.8 to 2.0, reflecting elevated volatility. Shares have climbed about 197% over the past year, trading in a range of $56 to $244 following a 10-for-1 split in October 2024.

Analysts’ price targets range from about $204 to $265, with a consensus rating of Moderate Buy based on one Strong Buy, 27 Buy, and seven Hold recommendations. Institutional ownership stands near 84%, while insider ownership is approximately 0.35%.