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Lam Research (LRCX) is surging following fiscal Q4 results and a much stronger-than-expected September outlook that extended the company's current demand ramp. LRCX delivered EPS of $1.82, nicely above expectations, while revenue increased 30% yr/yr to $6.72 bln, modestly ahead. Q1 guidance is likely the main driver, with EPS of $2.00-$2.30 and revenue of $7.7-$8.5 bln both well above expectations. The revenue midpoint implies growth of more than 20% sequentially.

• Drivers: Systems revenue increased approximately 14% sequentially to $4.25 bln, with memory reaching a record dollar level and representing 46% of the total, up from 39%. NAND revenue more than doubled sequentially on upgrades supporting enterprise SSD demand, while DRAM remained near record levels. Customer Support revenue increased 43% yr/yr to nearly $2.5 bln, led by record upgrades and strong spare-parts and services demand.
• Margins: Non-GAAP gross margin expanded 210 bps sequentially to 52.0%, while operating margin rose 340 bps to a record 38.4%. Pricing, operational and scale efficiencies, and favorable product mix contributed to the improvement. LRCX expects September gross margin of 51-53%, and targets gross margins in the mid-50s and operating margins in the mid-40s over the next several years.
• Demand: NAND led the quarter's acceleration, while LRCX expects 2027 WFE growth to be led by DRAM, followed by leading-edge foundry/logic and NAND. Advanced-packaging revenue is expected to grow more than 70% this year, while rising etch and deposition intensity is expected to support a third consecutive year of WFE outperformance in 2026.
• Outlook: LRCX raised its 2026 WFE outlook to the low-$150 bln range from $140 bln with upside bias. Looking to 2027, management said the industry remains undersupplied, with roughly eight to ten new fabs expected to come online and expand capacity to receive equipment by year-end. Customers are already working to secure tools at or beyond normal lead times.

Briefing.com Analyst Insight

LRCX's report reinforces that the semiconductor-equipment cycle remains strong, with AI demand supporting investment across memory, leading-edge logic, and advanced packaging. NAND drove the quarter's acceleration, while DRAM is expected to lead WFE growth in 2027, making LRCX's memory exposure a major source of strength. The September outlook points to another step higher, while the raised WFE forecast and improving customer visibility support sustained demand into next year. At the same time, 52% gross margin and the 39.5% September operating-margin outlook show that LRCX is converting the ramp into stronger profitability. The recent steep decline likely amplified today's move, but the broader demand outlook and strong execution provide a solid fundamental basis for the rebound.