Lam Research (LRCX) Reliance on International Sales: What Investors Need to Know

Have you looked into how Lam Research (LRCX) performed internationally during the quarter ending March 2025? Considering the widespread global presence of this semiconductor equipment maker, examining the trends in international revenues is essential for assessing its financial resilience and prospects for growth.

In today's increasingly interconnected global economy, a company's ability to tap into international markets can be a pivotal factor in shaping its overall financial health and growth trajectory. For investors, understanding a company's reliance on overseas markets has become increasingly crucial, as it offers insights into the company's sustainability of earnings, ability to tap into diverse economic cycles and overall growth potential.

International market involvement serves as insurance against economic downturns at home and enables engagement with economies that are growing more quickly. Still, this move toward diversification is not without its challenges, as it involves navigating through the fluctuations of currencies, geopolitical threats, and the distinctive nature of various markets.

While analyzing LRCX's performance for the last quarter, we found some intriguing trends in revenues from its overseas segments that Wall Street analysts commonly model and monitor.

For the quarter, the company's total revenue amounted to $4.72 billion, experiencing an increase of 24.4% year over year. Next, we'll explore the breakdown of LRCX's international revenue to understand the importance of its overseas business operations.

A Closer Look at LRCX's Revenue Streams Abroad

China generated $1.47 billion in revenues for the company in the last quarter, constituting 31.09% of the total. This represented a surprise of -15.74% compared to the $1.74 billion projected by Wall Street analysts. Comparatively, in the previous quarter, China accounted for $1.34 billion (30.69%), and in the year-ago quarter, it contributed $1.61 billion (42.35%) to the total revenue.

Southeast Asia accounted for 3.78% of the company's total revenue during the quarter, translating to $178.29 million. Revenues from this region represented a surprise of -40.78%, with Wall Street analysts collectively expecting $301.07 million. When compared to the preceding quarter and the same quarter in the previous year, Southeast Asia contributed $287.32 million (6.57%) and $190.33 million (5.02%) to the total revenue, respectively.

During the quarter, Europe contributed $133.71 million in revenue, making up 2.83% of the total revenue. When compared to the consensus estimate of $179.26 million, this meant a surprise of -25.41%. Looking back, Europe contributed $141.44 million, or 3.23%, in the previous quarter, and $177.36 million, or 4.68%, in the same quarter of the previous year.

Of the total revenue, $474.94 million came from Japan during the last fiscal quarter, accounting for 10.06%. This represented a surprise of +30.89% as analysts had expected the region to contribute $362.84 million to the total revenue. In comparison, the region contributed $363.28 million, or 8.30%, and $340.33 million, or 8.97%, to total revenue in the previous and year-ago quarters, respectively.

Of the total revenue, $1.13 billion came from Taiwan during the last fiscal quarter, accounting for 23.85%. This represented a surprise of +74.17% as analysts had expected the region to contribute $646.48 million to the total revenue. In comparison, the region contributed $737.67 million, or 16.86%, and $334.95 million, or 8.83%, to total revenue in the previous and year-ago quarters, respectively.

Korea accounted for 24.37% of the company's total revenue during the quarter, translating to $1.15 billion. Revenues from this region represented a surprise of +15.78%, with Wall Street analysts collectively expecting $993.68 million. When compared to the preceding quarter and the same quarter in the previous year, Korea contributed $1.09 billion (24.91%) and $916.81 million (24.17%) to the total revenue, respectively.

International Market Revenue Projections

The current fiscal quarter's total revenue for Lam Research, as projected by Wall Street analysts, is expected to reach $4.99 billion, reflecting an increase of 28.8% from the same quarter last year. The breakdown of this revenue by foreign region is as follows: China is anticipated to contribute 32.3% or $1.61 billion, Southeast Asia 6.1% or $304.53 million, Europe 3.3% or $162.52 million, Japan 6.7% or $334.44 million, Taiwan 13.6% or $675.56 million and Korea 18.5% or $920.39 million.

For the full year, the company is expected to generate $18.16 billion in total revenue, up 21.8% from the previous year. Revenues from China, Southeast Asia, Europe, Japan, Taiwan and Korea are expected to constitute 34.5% ($6.27 billion), 6.4% ($1.16 billion), 3.7% ($670.63 million), 7.4% ($1.35 billion), 14.8% ($2.68 billion) and 20.8% ($3.77 billion) of the total, respectively.

Wrapping Up

Relying on international markets for revenues, Lam Research faces both prospects and perils. Thus, tracking the company's international revenue trends is essential for accurately projecting its future trajectory.

In an environment where global interconnections and geopolitical skirmishes are intensifying, Wall Street analysts keep a keen eye on these trends, particularly for firms with overseas operations, to adjust their earnings predictions. Moreover, a range of other aspects, including how a company fares in its home country, significantly affects these projections.

Here at Zacks, we put a great deal of emphasis on a company's changing earnings outlook, as empirical research has shown that's a powerful force driving a stock's near-term price performance. Quite naturally, the correlation is positive here -- an upward revision in earnings estimates drives the stock price higher.

The Zacks Rank, our proprietary stock rating mechanism, demonstrates a notable performance history confirmed through external audits. It effectively utilizes the power of earnings estimate revisions to act as a predictor of a stock's price performance in the near term.

Lam Research currently has a Zacks Rank #2 (Buy), indicating that it could outperform the broader market in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Lam Research's Recent Stock Market Performance

Over the preceding four weeks, the stock's value has appreciated by 21.2%, against an upturn of 9.1% in the Zacks S&P 500 composite. In parallel, the Zacks Computer and Technology sector, which counts Lam Research among its entities, has appreciated by 11.9%. Over the past three months, the company's shares have seen a decline of 0.6% versus the S&P 500's 3.1% decline. The sector overall has witnessed a decline of 6.8% over the same period.

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

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