Lam Research stock jumps 17% as AI demand fuels earnings beat, outlook

Lam Research shares LRCX soared on Thursday after the semiconductor equipment maker delivered better-than-expected fiscal fourth-quarter results and issued stronger guidance, reinforcing investor confidence in artificial intelligence-driven chip demand.

The stock climbed about 23% in the session. At the time of writing, the stock was trading up 17% at $295.90.

The rally came after Lam reported adjusted earnings of $1.82 per share for the fiscal fourth quarter, beating analyst expectations of $1.69.

Revenue rose 30% year over year to $6.72 billion, exceeding Wall Street estimates of $6.66 billion.

For the fiscal first quarter of 2027, Lam forecast adjusted earnings of $2.15 per share on revenue of $8.1 billion.

Analysts had expected earnings of $1.84 per share on sales of $7.11 billion.

The strong report also lifted sentiment across the semiconductor equipment sector.

Applied Materials rose about 13%, while KLA gained roughly 7.6%, even as KLA remained sharply lower for the month after its own earnings failed to meet elevated investor expectations.

Memory and AI demand drive revenue growth

Lam's latest results highlighted continued strength in memory-related investments and AI infrastructure spending.

Systems revenue increased 23.6% from a year earlier to $4.25 billion.

Memory accounted for 46% of systems revenue, up from 39% in the previous quarter.

Non-volatile memory represented 23% of systems revenue as customers invested in conversions to 256-layer-and-above devices for enterprise solid-state drives.

DRAM also contributed 23%, supported by spending on wafer additions and upgrades across advanced process nodes.

Lam also reported stronger profitability during the quarter.

Non-GAAP gross margin improved to 52%, while operating margin expanded to 38.4%, supported by pricing actions, operational efficiencies and a favorable product mix.

The company increased its outlook for calendar 2026 wafer fabrication equipment spending to the low-$150 billion range from its previous $140 billion forecast, citing continued AI-driven demand for flash storage, advanced DRAM, leading-edge foundry technologies and advanced chip packaging.

Lam also strengthened its balance sheet during the quarter.

Cash, cash equivalents and restricted cash increased to $5.6 billion from $4.77 billion in the previous quarter.

Operating cash flow reached $1.46 billion, while the company invested $189 million in capital expenditures to expand US laboratories and global manufacturing capacity.

During fiscal 2026, Lam generated operating cash flow of $5.86 billion, repurchased $3.85 billion of shares and paid $1.27 billion in dividends, while continuing to invest for expected growth in AI-driven semiconductor demand.

Analysts remain bullish following results

Wall Street analysts broadly welcomed Lam's earnings and outlook.

UBS maintained its Buy rating and $435 price target.

Analyst Timothy Arcuri said Lam's quarterly performance and guidance "were very strong, particularly the service business as NAND customers are trying to increase bit production with limited wafer volume expansion."

Several brokerages also reiterated bullish views following the report.

Morgan Stanley maintained a Buy rating with a $367 price target.

Deutsche Bank reiterated a Buy rating and set a $320 price target, while Oppenheimer also maintained a Buy rating with a $400 target.