Lam Research Earnings Preview: How AI Memory Spending Impacts LRCX Stock

 

Lam Research holds its September quarter earnings call at 5:00 p.m. Eastern on October 21, which is 05:00 on October 22 in Singapore. Unlike most previews, the disagreement here is not about whether results will be strong but about what strong results are worth.

 

The company set a high bar itself. Per the June quarter release, September quarter guidance calls for revenue of $8.10 billion plus or minus $400 million, gross margin of 52.0% plus or minus one point, operating margin of 39.5% plus or minus one point, and diluted earnings of $2.15 plus or minus $0.15. Per Technosight's calculation, that revenue midpoint represents roughly 52% growth year over year and about 20.5% sequentially.

 

The share price tells a different story. LRCX closed at $272.20 on October 19, up 3.13%, for a market capitalisation near $340.64 billion at a price to earnings ratio around 47.26, against a 52-week range of $135.50 to $438.50, leaving it roughly 38% below the June 30 peak. ASML reported record results last week and its shares still fell on valuation. That combination says the order cycle is already in the price, and what needs proving now is duration rather than strength.

 

 

 

Timing and the bar. The call is at 5:00 p.m. Eastern on October 21, or 05:00 Singapore time on October 22, against guidance of $8.10 billion in revenue plus or minus $400 million, $2.15 in earnings per share plus or minus $0.15, and a 39.5% operating margin.

 

Last quarter was already a record. June quarter revenue reached $6.72 billion, up 15.1% sequentially, at a 51.7% GAAP gross margin, a 38.4% non-GAAP operating margin and non-GAAP earnings of $1.82 per share.

 

Memory is becoming the growth engine. Memory accounted for 46% of systems revenue in the June quarter, up from 39% in March, with NAND systems revenue roughly doubling, while across fiscal 2026 foundry was 54% of revenue against memory at 39%.

 

Equipment spending forecasts keep rising. Management lifted its 2026 wafer fab equipment outlook to the low $150 billions, from $140 billion in April and roughly $135 billion in January.

 

Peers confirmed demand without supporting valuations. ASML's third quarter delivered €11.7 billion of net sales at a 57.5% gross margin, with management saying planned 2027 and 2028 supply will not fully meet customer demand, and the shares still fell.

 

China remains the open variable. China was 26% of June quarter revenue, while the US affiliates export rule has been suspended for one year from November 9, 2025, putting its renewal at November 10, 2026.

 

 

The call is set for 5:00 p.m. Eastern on October 21, which lands early on October 22 for Asian investors. Note the fiscal convention, since this is Lam's fiscal first quarter of 2027, covering late June to late September 2026.

 

The bar is the company's own guidance rather than any external estimate. Revenue of $8.10 billion at the midpoint, earnings of $2.15 and an operating margin of 39.5% together require another 20% sequential revenue increase while margins keep expanding. Revenue jumps are not unusual for equipment makers during a build-out, but holding gross margin through a change in delivery mix is the harder part.

 

One detail deserves advance flagging. Deferred revenue closed the June quarter at $2.43 billion against $2.22 billion the prior quarter, and that figure excludes Japan shipments awaiting customer acceptance, whose estimated future revenue rose to $490.2 million from $434.3 million. Both are leading indicators of how revenue recognition will run in coming quarters, and they say more about order depth than a single quarter's revenue line.

 

 

The June quarter numbers were strong on their own. Revenue of $6.72 billion rose 15.1% sequentially and roughly 30% year over year, GAAP gross margin of 51.7% improved 190 basis points with non-GAAP at 52.0%, GAAP operating margin reached 37.4% with non-GAAP at 38.4% after a 340 basis point improvement, GAAP earnings came to $1.81 per share and non-GAAP to $1.82, while operating cash flow was $1.46 billion against $188.8 million of capital and intangible spending. The company also repurchased $246.6 million of stock and paid $325.3 million in dividends.

 

The more meaningful change is in the composition. Systems revenue was $4.25 billion while customer support revenue hit a record $2.47 billion, roughly 37% of the total. Per Technosight's breakdown, memory rose from 39% of systems revenue in March to 46% in June with NAND systems revenue roughly doubling, while across fiscal 2026 foundry remained 54% of revenue against memory at 39% and logic and IDM at 7%.

 

That shift cuts two ways for margins. Memory equipment faces a different competitive and pricing environment than advanced logic, so a rising memory share does not automatically help gross margin, while the fast-growing support business provides a steadier revenue base that compounds with the installed base and carries less cyclicality than system sales. The net of those two forces determines whether September gross margin holds 52%.

 

 

The transmission runs in three stages, and locating the current cycle requires following all three.

 

Stage one turns compute investment into fab capital spending. TSMC's third quarter brought revenue of $46.72 billion with full-year capital expenditure reaffirmed at $60 billion to $64 billion and a gross margin of 66.4%. Foundry spending plans are the most direct input to equipment orders.

 

Stage two is memory expansion. Demand for high-bandwidth memory in AI servers, layered onto the regular DRAM and NAND upgrade cycle, has pulled memory makers back into capacity additions, which is the backdrop to Lam's jump in memory mix. Relative to logic expansion, memory build-outs concentrate demand in etch and deposition, which is Lam's core territory.

 

Stage three is equipment capacity and delivery. ASML's commentary offers the most direct corroboration, with plans to raise low numerical aperture EUV and immersion DUV capacity 30% in 2027 over 2026 and a further 30% increase under investigation for 2028, alongside management's statement that planned supply for 2027 and 2028 will not fully meet customer demand, with some customers seeking to order for 2029 and 2030.

 

Chaining the three together, Lam lifting its 2026 wafer fab equipment outlook to the low $150 billions is not isolated optimism but corroboration across the chain. Worth remembering is that the forecast describes the industry pool, while Lam's share depends on the memory and logic split, which is why mix deserves closer tracking than the headline total.

 

 

Three companies reporting within roughly a week creates a rare verification window, and their share price reactions carry more information than the figures.

 

ASML posted third quarter net sales of €11.7 billion and net income of €5.0 billion at a 57.5% gross margin above guidance, guided to €14.2 billion to €15.2 billion for the fourth quarter and €44 billion to €45 billion for the year, and flagged supply tightness extending into 2028. The shares fell anyway, attributed to valuation. The breakdown sits in our piece on ASML earnings and valuation.

 

TSMC reaffirmed capital spending of $60 billion to $64 billion with 2nm already at 8% of revenue and profit up roughly 70%, covered in full in our TSMC Q3 earnings analysis.

 

The read-through for Lam is therefore clear. Demand-side evidence is abundant and consistent across all three, while the disagreement concentrates on valuation and cycle duration. At roughly 47 times earnings, LRCX implies this spending cycle runs at least through 2027, and ASML's reaction demonstrates that once expectations are fully priced, beating them need not lift the stock. What matters on October 21 is therefore less whether the numbers clear the bar and more whether management's language on 2027 supports the multiple.

 

 

China represented 26% of Lam's June quarter revenue, implying roughly $1.75 billion, second only to Taiwan at 27% and ahead of Korea at 20%, Japan at 9%, the United States at 9%, Southeast Asia at 5% and Europe at 4%.

 

The policy calendar lands just after the report. Per Technosight, the US affiliates export rule was suspended for one year from November 9, 2025, putting renewal at November 10, 2026, while an extension of the US-China trade truce runs through January 10, 2027 and is widely expected to carry the suspension forward, though formal notice is still pending.

 

Two implications follow. In the near term, management's assessment of China-related restrictions on the call may move the stock more than the quarterly figures. Over the medium term, with more than a quarter of revenue at stake, any rule change feeds directly into revenue and capacity planning, and that exposure cannot be fully hedged through operations.

 

 

Revenue against the $8.10 billion midpoint comes first. Given a range of plus or minus $400 million, landing near the top is what constitutes a genuine beat, while the low end would signal a clear deceleration in sequential growth.

 

Second is whether gross margin holds 52%. A rising memory share usually changes product mix, and margin slipping while revenue jumps would indicate lower-quality growth.

 

Third is memory as a share of systems revenue. June reached 46%, and further gains would confirm the memory build-out, while a pullback would suggest orders were pulled forward.

 

Fourth is the change in deferred revenue and the Japan acceptance balance, which together describe order depth and say more about 2027 visibility than current-quarter revenue.

 

Fifth is management's framing of 2027 equipment spending and its read on Chinese export rules.

 

Three risks frame the downside. Valuation risk dominates, since roughly 47 times earnings requires the cycle to extend well beyond a year, and ASML showed that record results do not prevent a valuation-driven decline. Concentration risk spans customers and geography, with China at 26% and a handful of customers setting the build-out pace. Policy risk carries a date, around November 10.

 

Three scenarios follow. In an acceleration case, revenue lands near the top of guidance, gross margin clears 53% and management points to further growth in 2027 spending, letting growth absorb the current multiple. In an in-line case, everything prints near the midpoint and the stock follows sector sentiment, repeating the ASML pattern of good results and a falling share price. In a deceleration case, memory mix retreats or margin slips while Chinese policy turns unfavourable, prompting a reassessment of cycle length, and high multiples adjust fastest in exactly that situation.

 

 

 

For James Mitchell, the question on this report is not whether Lam hits its guidance but what multiple the market will pay for a cycle everyone already understands. Guided growth of roughly 52% year over year and an equipment spending forecast lifted from about $135 billion to the low $150 billions in nine months leave no doubt about the backdrop. Yet the stock fell from $438.50 on June 30 to $272.20 on October 19, roughly 38%, during the same stretch in which fundamentals were revised upward. That divergence is rarely about doubting current results. It is a repricing of how much cycle remains.

 

Two misreadings look likely. The first treats a rising memory share as unambiguously positive. Memory climbing from 39% to 46% of systems revenue does confirm the build-out, but memory equipment carries different pricing and competitive dynamics than advanced logic, so the shift also reshapes margin composition, and watching revenue growth alone misses that. The second treats strong peer results as a floor for the share price. ASML set records and still fell, which shows the marginal value of a beat is low once expectations are fully priced, and the same applies to Lam on October 21.

 

Three relationships deserve tracking. The combined direction of deferred revenue and the Japan acceptance balance, measured against current revenue growth, shows whether the order book is building or being consumed. Memory share paired with gross margin measures the quality of growth. China revenue share set against policy developments around November 10 measures external risk. Any two of those deteriorating at once would put a 47 times multiple under real pressure.

 

Across assets, semiconductor equipment occupies much the same position in the AI investment cycle as memory makers do, upstream of everything. Margins expand far faster than revenue on the way up and retrace just as sharply on the way down, because the excess profit comes from supply lagging demand. ASML's warning that 2027 and 2028 supply still falls short indicates that gap has not yet closed. The real risk for investors therefore lies less in this quarter's figures than in how much of that known gap is still left unpriced.

 

 

 

The September quarter earnings call is at 5:00 p.m. Eastern on October 21, which is 05:00 Singapore time on October 22. Note the fiscal convention, since this is Lam's fiscal first quarter of 2027 covering late June through late September 2026. Results are usually released around the call, and the sharpest price moves cluster around the numbers and the management question session.

 

 

Company guidance sets it: revenue of $8.10 billion plus or minus $400 million, gross margin of 52.0% plus or minus one point, operating margin of 39.5% plus or minus one point and diluted earnings of $2.15 plus or minus $0.15, on roughly 1.255 billion diluted shares. The revenue midpoint implies about 52% growth year over year and 20.5% sequentially. Given the width of the range, only a print near the top constitutes a genuine beat.

 

 

June quarter revenue was $6.72 billion, up 15.1% sequentially and roughly 30% year over year. GAAP gross margin was 51.7% and non-GAAP 52.0%, GAAP operating margin 37.4% and non-GAAP 38.4%, with non-GAAP earnings of $1.82 per share. Operating cash flow reached $1.46 billion against $188.8 million of capital spending. Systems revenue was $4.25 billion while customer support set a record at $2.47 billion, about 37% of the total.

 

 

In three stages. Compute investment first becomes fab capital spending, with TSMC reaffirming $60 billion to $64 billion for the year. Memory expansion follows, as high-bandwidth memory demand from AI servers combines with the DRAM and NAND upgrade cycle to pull memory makers back into capacity additions. That finally shows up in equipment orders, with Lam lifting its 2026 wafer fab equipment outlook to the low $150 billions from $140 billion in April.

 

 

Its weight is rising quickly. Memory reached 46% of systems revenue in the June quarter, up from 39% in March, with NAND systems revenue roughly doubling. Across fiscal 2026, however, foundry still accounted for 54% of revenue against memory at 39% and logic and IDM at 7%. Because memory equipment faces different pricing and competitive conditions than advanced logic, a rising memory share does not affect margins in one direction only, which makes it worth checking separately.

 

 

Because expectations were already full. ASML reported third quarter net sales of €11.7 billion, net income of €5.0 billion and a 57.5% gross margin above guidance, and said planned supply for 2027 and 2028 would not fully meet customer demand, yet the shares fell on valuation. The lesson for Lam is that at a high multiple, meeting or even beating guidance may not move the stock, and the deciding variable shifts to what management says about the length of the cycle.

 

 

It warrants attention. China was 26% of Lam's June quarter revenue, its second largest source. On policy, the US affiliates export rule has been suspended for one year from November 9, 2025, with renewal due November 10, 2026, while the extension of the US-China trade truce runs to January 10, 2027 and is expected to carry the suspension forward, though formal notice is pending. Management's assessment on the call may matter more to the stock than the quarterly numbers.

 

 

The information above is provided for general market information and analysis only and does not constitute investment advice, financial advice, legal advice, tax advice or a recommendation to trade. Prices of equities, crypto assets and other related financial assets can fluctuate sharply, and past performance, financial metrics and company guidance do not guarantee future results. The financial data, guidance, industry spending forecasts, policy timelines and share prices cited here reflect publicly available information at the time of publication, while actual results will be defined by Lam Research's official release and investor relations materials, and policy arrangements may change at any time. Stock perpetual futures and similar derivatives carry leverage, volatility expands sharply around events such as earnings, and losses can exceed the initial outlay. Readers should conduct their own research and make decisions based on their own financial circumstances, investment objectives and risk tolerance, consulting a qualified professional where appropriate. The MEXC Crypto Pulse team accepts no liability for any direct or indirect loss arising from the use of this information.

 

 

James Mitchell specializes in technical analysis, market trends, and trading strategies for both Bitcoin and altcoins. Based in London, he has over 10 years of experience in financial markets. Before joining MEXC Learn, James worked as a senior analyst at a leading European investment firm, where he developed expertise in risk management and quantitative trading. His transition to cryptocurrency markets began in 2017, and he has since become recognized for his data-driven approach. He holds a Master's degree in Financial Economics from the London School of Economics. His analytical approach combines traditional technical analysis with on-chain metrics to provide readers with actionable insights.

 

Areas of Expertise: Technical Analysis, Market Trends and Cycles, Trading Strategies, Bitcoin and Altcoin Analysis, Risk Management.

 

 

 

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