We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Can DRAM Business Momentum Further Boost LRCX's Systems Revenues?
Read MoreHide Full Article
Key Takeaways
LRCX Q3 Systems revenues rose 24% year over year and 11% sequentially to $3.73 billion.
LRCX DRAM was 27% of Systems revenues, up from 23%, reaching a record Q3 level.
LRCX Q4 Systems revenues expected to grow 19% YoY as HBM, DDR5 and LPDDR5 adoption support tools demand.
Lam Research Corporation (LRCX - Free Report) is seeing strong momentum in dynamic random-access memory (DRAM) sales, which could further lift its Systems segment revenues in the coming quarters. DRAM makers are investing heavily to meet rising demand from artificial intelligence (AI) servers, high-bandwidth memory (HBM), smartphones and data centers. Since LRCX supplies critical etch and deposition tools used in advanced memory production, this spending trend is important for its growth.
In the third quarter of fiscal 2026, Lam Research’s Systems revenues grew 24% year over year and 11% sequentially to $3.73 billion. Memory accounted for 39% of systems revenues, rising from 34% in the prior quarter. More importantly, DRAM alone represented 27% of Systems revenues, up from 23% in the December quarter. Management also stated that DRAM revenues reached a record level during the third quarter, showing clear strength in this segment.
Lam Research is benefiting from customer migration to advanced 1c DRAM nodes and continued HBM capacity additions. These next-generation chips need more complex manufacturing steps, which increases demand for LRCX’s tools. The company noted that its Striker carbide solution is in huge demand from leading memory makers for bitline spacer applications, a key process in advanced DRAM scaling.
The company’s overall outlook remains encouraging. For the fourth quarter of 2026, Lam Research expects revenues of $6.6 billion at the midpoint, which would mark a 13% sequential increase. If DRAM customers continue expanding HBM output and ramping up DDR5 and LPDDR5 production, LRCX’s Systems business could gain further support. The Zacks Consensus Estimate for Systems revenues in the fourth quarter is pegged at $4.09 billion, indicating a year-over-year increase of 18.9%.
LRCX’s Rivals in DRAM Equipment Market
Two major competitors to Lam Research in the DRAM equipment space are Applied Materials, Inc. (AMAT - Free Report) and KLA Corporation (KLAC - Free Report) . Both are well-positioned to benefit as memory makers expand DRAM and HBM capacity for AI workloads.
Applied Materials is Lam Research’s closest broad-based rival because it also sells deposition, materials engineering and packaging tools used in advanced DRAM production. During the first quarter of fiscal 2026, Applied Materials reported Semiconductor Systems revenues of $5.14 billion, with DRAM making up 34% of that segment. The company also said that it achieved record DRAM revenues, showing strong customer spending in memory.
KLA Corporation competes differently, focusing on inspection and metrology tools that help memory makers improve yields and reduce defects. As DRAM nodes become more complex and HBM stacks add more layers, chipmakers need more process control steps. This can support KLA Corporation’s demand even if equipment cycles fluctuate. During the second quarter of fiscal 2026, memory accounted for 40% of the company’s Semiconductor Process Control segment revenues.
LRCX’s Share Price Performance, Valuation and Estimates
Shares of Lam Research have surged 274.2% over the past year compared with the Zacks Electronics – Semiconductors industry’s growth of 121.8%.
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 38.05, significantly higher than the industry’s average of 33.59.
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 33.6% and 33%, respectively. Estimates for fiscal 2026 and 2027 have been revised upward over the past seven days.
View the Zacks #1 Rank List
Image: Bigstock
Can DRAM Business Momentum Further Boost LRCX's Systems Revenues?
Key Takeaways
Lam Research Corporation (LRCX - Free Report) is seeing strong momentum in dynamic random-access memory (DRAM) sales, which could further lift its Systems segment revenues in the coming quarters. DRAM makers are investing heavily to meet rising demand from artificial intelligence (AI) servers, high-bandwidth memory (HBM), smartphones and data centers. Since LRCX supplies critical etch and deposition tools used in advanced memory production, this spending trend is important for its growth.
In the third quarter of fiscal 2026, Lam Research’s Systems revenues grew 24% year over year and 11% sequentially to $3.73 billion. Memory accounted for 39% of systems revenues, rising from 34% in the prior quarter. More importantly, DRAM alone represented 27% of Systems revenues, up from 23% in the December quarter. Management also stated that DRAM revenues reached a record level during the third quarter, showing clear strength in this segment.
Lam Research is benefiting from customer migration to advanced 1c DRAM nodes and continued HBM capacity additions. These next-generation chips need more complex manufacturing steps, which increases demand for LRCX’s tools. The company noted that its Striker carbide solution is in huge demand from leading memory makers for bitline spacer applications, a key process in advanced DRAM scaling.
The company’s overall outlook remains encouraging. For the fourth quarter of 2026, Lam Research expects revenues of $6.6 billion at the midpoint, which would mark a 13% sequential increase. If DRAM customers continue expanding HBM output and ramping up DDR5 and LPDDR5 production, LRCX’s Systems business could gain further support. The Zacks Consensus Estimate for Systems revenues in the fourth quarter is pegged at $4.09 billion, indicating a year-over-year increase of 18.9%.
LRCX’s Rivals in DRAM Equipment Market
Two major competitors to Lam Research in the DRAM equipment space are Applied Materials, Inc. (AMAT - Free Report) and KLA Corporation (KLAC - Free Report) . Both are well-positioned to benefit as memory makers expand DRAM and HBM capacity for AI workloads.
Applied Materials is Lam Research’s closest broad-based rival because it also sells deposition, materials engineering and packaging tools used in advanced DRAM production. During the first quarter of fiscal 2026, Applied Materials reported Semiconductor Systems revenues of $5.14 billion, with DRAM making up 34% of that segment. The company also said that it achieved record DRAM revenues, showing strong customer spending in memory.
KLA Corporation competes differently, focusing on inspection and metrology tools that help memory makers improve yields and reduce defects. As DRAM nodes become more complex and HBM stacks add more layers, chipmakers need more process control steps. This can support KLA Corporation’s demand even if equipment cycles fluctuate. During the second quarter of fiscal 2026, memory accounted for 40% of the company’s Semiconductor Process Control segment revenues.
LRCX’s Share Price Performance, Valuation and Estimates
Shares of Lam Research have surged 274.2% over the past year compared with the Zacks Electronics – Semiconductors industry’s growth of 121.8%.
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 38.05, significantly higher than the industry’s average of 33.59.
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 33.6% and 33%, respectively. Estimates for fiscal 2026 and 2027 have been revised upward over the past seven days.
Image Source: Zacks Investment Research
Lam Research currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.