Can Foundry Strength Keep Lam Research's $5B+ Revenue Streak Alive?

Lam Research Corporation LRCX has delivered revenues above the $5 billion mark for the past three consecutive quarters, reflecting strong demand for wafer fabrication equipment. In the last reported financial results for the second quarter of fiscal 2026, revenues surged 22% to $5.34 billion. The robust top-line performance was primarily aided by strong growth in the Systems segment’s revenues, benefiting from artificial intelligence (AI)-driven demand in the foundry market.

In the second quarter of fiscal 2026, Systems revenues surged 28% year over year to $3.36 billion. Of the total Systems sales, the foundry business accounted for 59%, up from 35% in the year-ago quarter. Lam Research’s foundry business continues to benefit from rising investments in advanced chip manufacturing, especially for AI and high-performance computing applications. The company’s strong position in etch and deposition tools, which are critical for smaller and more complex transistor designs, has made it a key supplier to major foundries.

Lam Research’s new technologies, such as the Aether dry resist extreme ultraviolet (EUV) patterning solution and the Akara conductor etch system, are gaining traction with leading-edge chipmakers. These advanced technologies improve pattern precision and process efficiency, which is essential for the ongoing transition to next-generation nodes like gate-all-around transistors.

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

Analysts’ projections for the third quarter of fiscal 2026 also support our views of the continued growth momentum across LRCX’s Systems business unit, at least in the near term. The Zacks Consensus Estimate for Systems’ third-quarter revenues is pegged at $3.7 billion, indicating year-over-year growth of 22%. The consensus mark for total revenues stands at $5.74 billion, calling for a year-over-year increase of 21.7%.

LRCX’s Rivals in 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 chip-making process.

LRCX’s Share Price Performance, Valuation and Estimates

Shares of Lam Research have surged 200.4% over the past year compared with the Zacks Electronics – Semiconductors industry’s gain of 50.4%.

LRCX One-Year Price Return Performance

From a valuation standpoint, Lam Research trades at a forward price-to-earnings ratio of 39.75, significantly higher than the industry’s average of 32.07.

Lam Research Forward 12-Month P/E Ratio

The Zacks Consensus Estimate for Lam Research’s fiscal 2026 and 2027 earnings implies a year-over-year increase of approximately 27.1% and 25.6%, respectively. Estimates for fiscal 2026 have been revised upward over the past 30 days, while those for fiscal 2027 have been raised over the past seven days.

Lam Research currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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