Lam Research (NASDAQ:LRCX) Posts Better-Than-Expected Sales In Q4

Semiconductor equipment maker Lam Research (NASDAQ:LRCX) announced better-than-expected revenue in Q4 CY2025, with sales up 22.1% year on year to $5.34 billion. On top of that, next quarter’s revenue guidance ($5.7 billion at the midpoint) was surprisingly good and 6.2% above what analysts were expecting. Its non-GAAP profit of $1.27 per share was 8.7% above analysts’ consensus estimates.

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"Lam delivered another strong quarter to cap a record year," said Tim Archer, Lam Research's President and Chief Executive Officer.

Company Overview

Founded in 1980 by David Lam, the man who pioneered semiconductor etching technology, Lam Research (NASDAQ:LRCX) is one of the leading providers of wafer fabrication equipment used to make semiconductors.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Luckily, Lam Research’s sales grew at a solid 11.5% compounded annual growth rate over the last five years. Its growth surpassed the average semiconductor company and shows its offerings resonate with customers, a great starting point for our analysis. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions (which can sometimes offer opportune times to buy).

We at StockStory place the most emphasis on long-term growth, but within semiconductors, a half-decade historical view may miss new demand cycles or industry trends like AI. Lam Research’s annualized revenue growth of 19.8% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

This quarter, Lam Research reported robust year-on-year revenue growth of 22.1%, and its $5.34 billion of revenue topped Wall Street estimates by 1.8%. Beyond the beat, this marks 7 straight quarters of growth, showing that the current upcycle has had a good run - a typical upcycle usually lasts 8-10 quarters. Company management is currently guiding for a 20.8% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 12.9% over the next 12 months, a deceleration versus the last two years. We still think its growth trajectory is satisfactory given its scale and indicates the market is baking in success for its products and services.

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Product Demand & Outstanding Inventory

Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’ capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.

This quarter, Lam Research’s DIO came in at 136, which is 27 days below its five-year average. At the moment, these numbers show no indication of an excessive inventory buildup.

Key Takeaways from Lam Research’s Q4 Results

It was good to see Lam Research beat analysts’ EPS expectations this quarter. We were also glad its revenue guidance for next quarter exceeded Wall Street’s estimates. Zooming out, we think this was a good print with some key areas of upside. The stock remained flat at $240.52 immediately following the results.

Lam Research put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).