A month has gone by since the last earnings report for Lam Research (LRCX Quick QuoteLRCX - Free Report) . Shares have lost about 4.5% 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? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Lam Research Q1 Earnings & Revenues Beat Estimates

Lam Research Corporation delivered first-quarter fiscal 2025 post-split non-GAAP earnings of 86 cents per share, which surpassed the Zacks Consensus Estimate of 80 cents. The figure increased 6.2% sequentially. Lam Research announced its decision of a 10-for-1 stock split on May 21, 2024. The stock split was made effective on Oct. 2, 2024, for shareholders of record at that time.

Revenues of $4.17 billion surpassed the Zacks Consensus Estimate of $4.05 billion. The figure increased 7.6% quarter over quarter. The sequential growth in the top line was driven by the strong performance of the Customer Support Business Group and the rebound in the System business.

LRCX’s Segment in Details

Lam Research’s System revenues were $2.4 billion (57.4% of the total revenues), up 10.3% from the previous quarter. System revenues grew 16.3% year over year. The reported figure missed the Zacks Consensus Estimate of $2.52 billion.

In the Customer Support Business Group, revenues for the reported quarter were $1.78 billion (42.6% of the total revenues), up 4.3% from the previous quarter and 24.5% year over year. The figure beat the consensus mark of $1.53 billion.

China, Korea and Taiwan accounted for 37%, 18% and 15% of Lam Research’s total revenues, respectively, for the fiscal first quarter. Japan, Southeast Asia, the United States and Europe accounted for 7%, 6%, 12% and 5% of total revenues, respectively.

Operating Details of LRCX

The non-GAAP gross margin was 48.2%, which contracted 30 basis points (bps) from the previous quarter.

Non-GAAP operating expenses were $722 million, up 4.8% from the previous quarter. As a percentage of revenues, the figure contracted 50 bps quarter over quarter to 17.3%.

The non-GAAP operating margin was 30.9%, expanding 20 bps from the previous quarter’s 30.7%.

LRCX’s Balance Sheet & Cash Flow

As of Sept. 29, 2024, cash and cash equivalents were $6.07 billion compared with $5.85 billion as of June 30, 2024.

Cash flow from operating activities was $1.57 billion for the reported quarter, up from $862.43 million in the previous quarter.

In the reported quarter, Lam Research paid out dividends of $261 million and repurchased shares worth $1 billion.

LRCX Provides Strong Guidance

For second-quarter fiscal 2025, LRCX now expects its revenues to be $4.30 billion (+/- $300 million), up from the previous guidance of $4.05 billion (+/- $300 million).

The non-GAAP gross margin is projected at 47% (+/-1%), whereas the non-GAAP operating margin is expected to be 30% (+/-1%).

Non-GAAP earnings per share are projected to be 87 cents (+/- 10 cents) on a diluted share count of 1.3 billion.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

VGM Scores

At this time, Lam Research has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Lam Research has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.