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AI Boom Aids LRCX's Systems Revenue Growth: Can the Momentum Continue?
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Key Takeaways
LRCX Systems revenue rose 28% YoY to $3.36B in Q2 fiscal 2026 amid AI-driven chip demand.
Lam Research benefits from rising WFE spending, projected at $135B in 2026, boosting growth visibility.
LRCX gains traction with Aether EUV and Akara etch tools, supporting advanced node manufacturing demand.
Lam Research Corporation (LRCX - Free Report) is witnessing strong traction in its Systems business, fueled by the ongoing surge in artificial intelligence (AI)-driven semiconductor spending. As chipmakers expand capacity for high-performance computing and AI workloads, demand for LRCX’s etch and deposition tools continues to rise.
This trend is supporting steady order flows and improving visibility for Lam Research’s Systems revenues in the near term. In the second quarter of fiscal 2026, Systems revenues rose 28% year over year to $3.36 billion. The robust growth reflects rising investments in advanced nodes, high-bandwidth memory (HBM) and complex chip architectures that require more process steps and precision tools.
The broader industry backdrop indicates that the segment’s growth momentum will continue at least in the near term. On the second-quarter earnings call, management stated that it expects wafer fabrication equipment (WFE) spending to reach about $135 billion in 2026, up from nearly $110 billion in 2025, driven largely by AI infrastructure demand. This expanding spending pool directly benefits LRCX’s Systems segment, which is closely tied to leading-edge manufacturing.
Lam Research’s new technologies, such as the Aether dry resist extreme ultraviolet 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 revenues in the near term. The Zacks Consensus Estimate for Systems revenues in fiscal 2026 is pegged at $14.5 billion, indicating a year-over-year increase of 26.2%.
LRCX’s Rivals in the Foundry Equipment Market
Applied Materials, Inc. (AMAT - Free Report) and KLA Corporation (KLAC - Free Report) 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 251.2% over the past year compared with the Zacks Electronics – Semiconductors industry’s growth of 101.6%.
LRCX One-Year Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, Lam Research trades at a forward price-to-earnings ratio of 34.55, significantly higher than the industry’s average of 27.01.
Lam Research Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Lam Research’s fiscal 2026 and 2027 earnings implies a year-over-year increase of approximately 26.6% and 27%, respectively. Estimates for fiscal 2026 and 2027 have been revised upward over the past 60 days.
View the Zacks #1 Rank List
Image: Bigstock
AI Boom Aids LRCX's Systems Revenue Growth: Can the Momentum Continue?
Key Takeaways
Lam Research Corporation (LRCX - Free Report) is witnessing strong traction in its Systems business, fueled by the ongoing surge in artificial intelligence (AI)-driven semiconductor spending. As chipmakers expand capacity for high-performance computing and AI workloads, demand for LRCX’s etch and deposition tools continues to rise.
This trend is supporting steady order flows and improving visibility for Lam Research’s Systems revenues in the near term. In the second quarter of fiscal 2026, Systems revenues rose 28% year over year to $3.36 billion. The robust growth reflects rising investments in advanced nodes, high-bandwidth memory (HBM) and complex chip architectures that require more process steps and precision tools.
The broader industry backdrop indicates that the segment’s growth momentum will continue at least in the near term. On the second-quarter earnings call, management stated that it expects wafer fabrication equipment (WFE) spending to reach about $135 billion in 2026, up from nearly $110 billion in 2025, driven largely by AI infrastructure demand. This expanding spending pool directly benefits LRCX’s Systems segment, which is closely tied to leading-edge manufacturing.
Lam Research’s new technologies, such as the Aether dry resist extreme ultraviolet 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 revenues in the near term. The Zacks Consensus Estimate for Systems revenues in fiscal 2026 is pegged at $14.5 billion, indicating a year-over-year increase of 26.2%.
LRCX’s Rivals in the Foundry Equipment Market
Applied Materials, Inc. (AMAT - Free Report) and KLA Corporation (KLAC - Free Report) 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 251.2% over the past year compared with the Zacks Electronics – Semiconductors industry’s growth of 101.6%.
LRCX One-Year Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, Lam Research trades at a forward price-to-earnings ratio of 34.55, significantly higher than the industry’s average of 27.01.
Lam Research Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Lam Research’s fiscal 2026 and 2027 earnings implies a year-over-year increase of approximately 26.6% and 27%, respectively. Estimates for fiscal 2026 and 2027 have been revised upward over the past 60 days.
Image Source: Zacks Investment Research
Lam Research currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.