It has been about a month since the last earnings report for Lam Research (LRCX). Shares have lost about 3.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Lam Research due for a breakout? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent drivers for Lam Research Corporation before we dive into how investors and analysts have reacted as of late.
Lam Research Q2 Earnings Surpass Expectations, Revenues Rise Y/Y
Lam Research reported second-quarter fiscal 2026 results, wherein both top and bottom lines surpassed the Zacks Consensus Estimate.
LRCX reported second-quarter non-GAAP earnings of $1.27 per share, which beat the Zacks Consensus Estimate by 8.5%. The bottom line increased 39.6% on a year-over-year basis.
In the second quarter of fiscal 2026, LRCX reported revenues of $5.34 billion, which surpassed the consensus mark by 2.1%. The top line rose 22% from the year-ago quarter’s $4.38 billion.
LRCX’s Q2 Revenues in Detail
Lam Research’s Systems revenues were $3.36 billion (62.8% of total revenues), down 5.4% from the previous quarter and up 28% year over year. The Zacks Consensus Estimate for Systems revenues was pegged at $3.44 billion.
In the Customer Support Business Group, revenues were $1.99 billion, comprising 37.2% of total revenues. This marks an 11.9% rise from the previous quarter’s $1.78 billion, and a 13.5% increase from the year-ago period. The Zacks Consensus Estimate for Customer Support Business Group revenues was pegged at $1.78 billion.
During the quarter, China contributed 35% of total revenues, Taiwan 20%, and Korea 20%. Other regions like Japan contributed 10%, the United States 5%, Southeast Asia 8%, and Europe 2%.
Operating Details of LRCX
Lam Research’s non-GAAP gross margin declined to 49.7%, down 90 basis points from 50.6% in the previous quarter.
Non-GAAP operating expenses decreased to $827.49 million, down 0.5% from $831.92 million. As a percentage of revenues, non-GAAP operating expenses declined to 15.5% in the second quarter from 15.6% in the first quarter.
The non-GAAP operating margin contracted 70 basis points sequentially to 34.3%.
LRCX’s Balance Sheet & Cash Flow
As of Dec. 28, 2025, Lam Research held $6.18 billion in cash and cash equivalents, down from $6.69 billion at the end of the prior quarter.
Cash flow from operating activities decreased to $1.48 billion, down from $1.78 billion in the previous quarter.
During the quarter, Lam Research paid dividends totaling $327.5 million and repurchased shares worth $1.47 billion.
LRCX Provides Strong Guidance
For the third quarter of fiscal 2026, Lam Research projects revenues to be $5.7 billion (+/- $300 million). The company expects a non-GAAP gross margin of 49% (+/-1%) and a non-GAAP operating margin of 34% (+/-1%). Non-GAAP earnings per share are projected to be $1.35 (+/- $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 12.74% due to these changes.
VGM Scores
At this time, Lam Research has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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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