Lam Research Corporation (LRCX): A Bull Case Theory

We came across a bullish thesis on Lam Research Corporation on MTC’s Substack. In this article, we will summarize the bulls’ thesis on LRCX. Lam Research Corporation's share was trading at $213.31 as of February 5th. LRCX’s trailing and forward P/E were 43.80 and 41.15 respectively according to Yahoo Finance.

Lam Research Corporation designs, manufactures, markets, refurbishes, and services semiconductor processing equipment used in the fabrication of integrated circuits in the United States and internationally. LRCX reported a strong second quarter of fiscal 2026, exceeding revenue, earnings, and guidance expectations, driven by robust demand for AI infrastructure and advanced packaging applications.

Revenue reached $5.34 billion, up 22% year-over-year and slightly above consensus, marking the company’s tenth consecutive quarter of growth despite a significant geographical revenue restructuring that reduced China’s contribution from 43% to 35%.

Non-GAAP EPS rose 39.6% year-over-year to $1.27, while gross and operating margins remained healthy at 49.7% and 34.3%, respectively, even with sequential contraction due to customer mix changes. The foundry segment dominated system revenue at 59%, led by TSMC’s expansion into advanced nodes, while DRAM revenue surged, offsetting weaker NAND, which fell to 11% of system revenue. Lam’s Customer Support Business Group contributed $1.99 billion in revenue, highlighting the strength of recurring services.

Technologically, Lam is strategically positioned with leadership across key semiconductor inflection points, including gate-all-around transistors, high-bandwidth memory (HBM4), and advanced packaging. Tools such as Akara, VECTOR TEOS 3D, Syndion®, SABRE 3D®, and Striker® give Lam a unique end-to-end presence from wafer preparation to final assembly, enabling capture of multi-year growth as semiconductor architectures scale. The company maintained aggressive capital returns, repurchasing $2.44 billion of stock and paying $619.5 million in dividends, while sustaining a flexible balance sheet with $6.2 billion in cash.

Despite near-term margin pressures from geographic and customer mix, cleanroom constraints, and potential regulatory headwinds in China, Lam’s diversified customer base, technological leadership, and expanding service revenue provide resilience.

Forward guidance for Q3 FY26 projects $5.7 billion revenue and $1.35 EPS, with full-year wafer fabrication equipment (WFE) spending expected to reach $13.5 billion. Lam’s combination of industry-leading market share, advanced technology portfolio, and strong cash generation positions it as a compelling investment with multiple growth catalysts, particularly in AI-driven semiconductor demand and advanced packaging solutions.

Previously, we covered a bullish thesis on Lam Research Corporation (LRCX) by The Antifragile Investor in May 2025, which highlighted the company’s dominance in semiconductor etching, deposition, and high-margin service revenue. LRCX’s stock price has appreciated by approximately 157% since our coverage. MTC shares a similar perspective but emphasizes Q2 FY26 results, AI-driven demand, advanced packaging, and geographic revenue shifts as updated growth catalysts.

Lam Research Corporation is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 93 hedge fund portfolios held LRCX at the end of the third quarter which was 85 in the previous quarter. While we acknowledge the risk and potential of LRCX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than LRCX and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.