A month has gone by since the last earnings report for Lam Research (LRCX). Shares have lost about 5.4% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Lam Research due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Lam Research's Q1 Earnings Beat Expectations, Revenues Rise Y/Y
Lam Research reported first-quarter fiscal 2026 results, wherein both top and bottom lines surpassed the Zacks Consensus Estimate. LRCX reported first-quarter non-GAAP earnings of $1.26 per share, which beat the Zacks Consensus Estimate by 4.1%. The bottom line increased 46.5% on a year-over-year basis.
In the first quarter of fiscal 2026, LRCX reported revenues of $5.32 billion, which surpassed the consensus mark by 2%. The top line increased 28% from the year-ago quarter’s $4.17 billion.
LRCX’s Q1 Revenues in Detail
Lam Research’s Systems revenues were $3.55 billion (66.6% of total revenues), up 3% from the previous quarter and 48% year over year. Our model estimate for Systems revenues was pegged at $3.43 billion.
In the Customer Support Business Group, revenues were $1.77 billion, comprising 33.4% of total revenues. This marks a 2.5% rise from the previous quarter’s $1.73 billion, and a 0.1% increase from the year-ago period. Our model estimate for Customer Support Business Group revenues was pegged at $1.79 billion.
During the quarter, China contributed 43% of total revenues, Taiwan 19%, and Korea 15%. Other regions included Japan 10%, the United States 6%, Southeast Asia 5%, and Europe 2%.
Operating Details of LRCX
Lam Research’s non-GAAP gross margin rose to 50.6%, up 30 basis points from 50.3% in the previous quarter.
Non-GAAP operating expenses increased to $831.92 million, up 1.2% from $822.38 million. As a percentage of revenues, non-GAAP operating expenses declined to 15.6% in the first quarter from 15.9% in the fourth quarter.
As a result, the non-GAAP operating margin improved 60 basis points sequentially to 35%.
LRCX’s Balance Sheet & Cash Flow
As of Sept. 28, 2025, Lam Research held $6.69 billion in cash and cash equivalents, up from $6.39 billion at the end of the prior quarter.
Cash flow from operating activities decreased significantly to $1.78 billion, down from $2.55 billion in the previous quarter.
During the quarter, Lam Research paid dividends totalling $291.9 million and repurchased shares worth $975.8 million.
LRCX Provides Strong Guidance
For the second quarter of fiscal 2026, Lam Research projects revenues of $5.2 billion (+/- $300 million). The company expects a non-GAAP gross margin of 48.5% (+/-1%) and a non-GAAP operating margin of 33% (+/-1%). Non-GAAP earnings per share are projected to be $1.15 (+/- $0.10), with a diluted share count of 1.26 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in fresh estimates.
The consensus estimate has shifted 10.53% due to these changes.
VGM Scores
Currently, Lam Research has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock has a grade of D on the value side, putting it in the bottom 40% for value investors.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Lam Research has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Lam Research Corporation (LRCX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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