Can Lam Research Sustain $5B-Plus Revenue Streak on Foundry Strength?

Lam Research Corporation LRCX recently reported record first-quarter fiscal 2026 revenues of $5.32 billion, marking the third straight quarter of $5 billion-plus sales. The first-quarter top line surged 28% year over year. This robust performance was mainly driven by strong demand from the foundry and logic businesses, which drove the company’s Systems segment revenues higher by 48% to $3.55 billion.

The foundry business accounted for approximately 60% of Lam Research’s first-quarter Systems revenues, up from 52% in the previous quarter. This revenue concentration inclination toward foundry highlights the increasing demand for LRCX’s etch and deposition tools in building advanced nodes used in artificial intelligence (AI) and high-performance computing.

The foundry market has remained resilient amid the ongoing macroeconomic challenges as global chipmakers continue to expand capacity to meet rising data center and AI-related chip demand. Lam Research’s recent deal wins for its EUV (extreme ultraviolet) patterning and advanced etch technologies, such as the Aether dry resist solution, demonstrate its strengthening position in the chipmaking tool market.

We believe that the company’s sustained focus on expanding technological leadership, along with rising demand for AI and advanced computing chips, will strengthen its foundry business. This will continue driving the company’s overall revenues in the near term.

Analysts’ projections for upcoming quarters indicate that LRCX’s $5 billion-plus revenue streak will remain intact at least in the near term. The Zacks Consensus Estimate for the second and third-quarter revenues is pegged at $5.22 billion each.

LRCX’s Competition in the Foundry Equipment Market

Applied Materials, Inc. AMAT and KLA Corporation KLAC are two major competitors of Lam Research in the semiconductor equipment market. Applied Materials competes directly with LRCX in deposition and etch technologies used in foundry and logic manufacturing. Applied Materials’ large product portfolio and customer relationships with top chipmakers like TSMC and Samsung make it a key player in the chipmaking equipment space.

KLA Corporation specializes in process control and inspection tools that are essential for maintaining yield and quality in advanced chip production. While it doesn’t compete head-to-head with Lam Research in core etch or deposition, KLA Corporation’s process control and inspection tools play a crucial role in the chipmaking process.

LRCX’s Share Price Performance, Valuation and Estimates

Shares of Lam Research have surged 115.4% year to date compared with the Zacks Electronics – Semiconductors industry’s gain of 46.6%.

LRCX YTD Price Return Performance

From a valuation standpoint, Lam Research trades at a forward price-to-earnings ratio of 31.56, significantly lower than the industry’s average of 39.07.

LRCX Forward 12-Month P/S Ratio

The Zacks Consensus Estimate for Lam Research’s fiscal 2026 and 2027 earnings implies a year-over-year increase of approximately 14% and 15.2%, respectively. Estimates for fiscal 2026 and 2027 earnings have been revised upward in the past seven days.

Lam Research currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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