Lam Research Earnings Beat, Guides Above Forecasts
Lam Research earnings beat and guided Q3 revenue above consensus, boosting tool demand while raising trader risk from rich valuation and China headwinds.

KEY TAKEAWAYS
- Q2 non-GAAP EPS $1.27 beat estimates by about $0.10-$0.12.
- Q3 revenue guidance midpoint $5.7B +/- $300M about 6.9% above consensus.
- Trailing P/E near 52.8 and RSI about 72.5 signal elevated valuation and momentum risk.
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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%.





