LRCX Likely to Beat Q2 Earnings Estimates: Should You Buy the Stock?

Lam Research Corporation LRCX is likely to beat earnings estimates when it releases its second-quarter fiscal 2026 results on Jan. 28. The company expects revenues of $5.2 billion (+/- $300 million) for the quarter. The Zacks Consensus Estimate is pegged at $5.22 billion, indicating 19.2% growth from the figure reported in the year-ago quarter.

Lam Research expects earnings of $1.15 (+/- $0.10) per share for the second quarter. The consensus mark for second-quarter earnings has remained unchanged at $1.16 per share over the past 60 days, implying a 27.5% year-over-year increase.

Lam Research has an impressive earnings surprise history. In the last reported quarter, it delivered an earnings surprise of 4.13%. The company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 5.89%.

Q2 Earnings Whispers for Lam Research

Our proven model predicts an earnings beat for Lam Research this earnings season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is exactly the case here.

Earnings ESP of LRCX: Earnings ESP, which represents the difference between the Most Accurate Estimate ($1.18) and the Zacks Consensus Estimate ($1.16), is +1.56%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Lam Research’s Zacks Rank: LRCX presently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors Likely to Influence LRCX’s Q2 Results

Lam Research has been riding on the wave of a strong rebound in the semiconductor industry, driven by the surging demand for memory and advanced AI applications. The rise in spending on AI and machine learning, particularly with the growing influence of Generative AI, is likely to have provided a significant boost to the company's performance in the fiscal second quarter. The increasing need for advanced AI-centric chips has become a key growth catalyst.

Heightened dynamic random access memory (DRAM) spending, especially in response to demand for high-bandwidth memory, is likely to have played in Lam Research's favor. The company's momentum in 3D DRAM and advanced packaging technologies is also expected to have added to its strong performance. At the same time, ongoing technological advancements are pushing NAND spending higher, which is likely to contribute to LRCX’s quarterly results.

Lam Research’s focus on expanding semiconductor fabrication capabilities, along with its heavy investment in research and development, positions it well in a competitive landscape. Its innovation through Semiverse solutions, particularly in high-aspect-ratio memory hole etch for NAND, is likely to have fueled this progress. LRCX’s strategic investments in cutting-edge technologies are anticipated to have bolstered its performance in the foundry and logic segment, while the increasing adoption of 3D architectures is expected to have supported growth in its etch and deposition services.

The company’s robust suite of tools, which enable foundry logic inflections, is likely to have secured strong customer traction. With the accelerating deployment of 5G and the Internet of Things (IoT), Lam Research’s semiconductor and memory solutions remain in high demand, reinforcing its market position in the fiscal second quarter.

All these factors are likely to have driven growth in system revenues. Our model estimate for second-quarter system revenues is pegged at $3.41 billion, implying year-over-year growth of 29.7%, underscoring Lam Research’s continued strength in the evolving tech landscape. Our model estimate for the Customer Support segment’s first-quarter revenues is pegged at $1.8 billion, indicating a year-over-year increase of 2.6%.

LRCX’s Stock Price Performance & Valuation

Lam Research shares have surged 177% over the past year, outperforming the Zacks Electronics – Semiconductors industry, which has risen 30.6%. The stock has also surpassed major semiconductor equipment providers, including KLA Corporation KLAC, ASML Holding ASML and Applied Materials AMAT. Shares of KLA Corporation, ASML Holding and Applied Materials have soared 100.1%, 90.5% and 70.7%, respectively.

LRCX One-Year Price Return Performance

Let us look at the value Lam Research offers investors at current levels. Currently, LRCX is trading at a premium, with a forward 12-month P/E of 41.29X compared with the industry’s 32.75X.

Lam Research Forward 12-Month P/E Ratio

Compared with semiconductor giants, the stock trades at a lower multiple than ASML Holding, while at a higher multiple than KLA Corporation and Applied Materials. At present, ASML Holding, KLA Corporation and Applied Materials have forward 12-month P/E of 43.54X, 37.70X, and 32.55X, respectively.

Investment Thesis on LRCX Stock

Lam Research is capitalizing on AI trends. It builds the tools chipmakers need to manufacture next-generation semiconductors, including high-bandwidth memory (HBM) and chips used in advanced packaging. These technologies are vital for powering AI and cloud data centers.

Lam Research’s products are not only critical but also innovative. For example, its ALTUS ALD tool uses molybdenum to improve speed and efficiency in chip production. Another product, the Aether platform, helps chipmakers achieve higher performance and density. These are essential capabilities as demand for advanced AI chips continues to increase.

In 2024, Lam Research’s shipments for gate-all-around nodes and advanced packaging exceeded $1 billion, and management had expected this figure to triple to more than $3 billion in 2025. Additionally, the industry’s migration to backside power distribution and dry-resist processing presents growth opportunities for LRCX’s cutting-edge fabrication solutions.

Lam Research’s steady investments in research & development and new products are paying off. Its Cryo 3.0 technology has set new standards in the industry, and the Aether dry-resist system is being adopted, especially for high-bandwidth DRAM.

Expanding its manufacturing operations in Asia has also helped the company lower costs and improve margins. In the fourth quarter of fiscal 2025, Lam Research’s non-GAAP operating margin increased by 60 basis points to 35% year over year.

Conclusion: Buy LRCX Stock for Now

Lam Research’s reasonable valuation, strong financials and clear focus on AI-related growth make it a good investment choice right now. Its market position in AI and data center chipmaking, combined with ongoing innovation, should keep driving long-term gains.

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

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