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LRCX Ups WFE View Amid AI Demand: Can It Lift Systems Revenues?
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Key Takeaways
LRCX reported record $5.84B revenues in Q3'26 and EPS of $1.47.
Lam Research raised its 2026 WFE outlook to $140B from $135B on stronger AI-driven spending trends.
AND conversion spending of $40B expected before 2027, while advanced packaging revenues are over 50% in 2026.
Lam Research (LRCX - Free Report) is witnessing strong momentum in wafer fabrication equipment (WFE) demand as accelerating AI infrastructure investments drive higher semiconductor capital spending across memory, foundry and logic markets. During the third-quarter fiscal 2026 earnings call, the company raised its 2026 WFE outlook to $140 billion from the prior estimate of $135 billion, citing stronger customer spending trends and continued hyperscale AI infrastructure expansion.
Rising WFE spending is driving Lam Research’s financial performance. In the third quarter of fiscal 2026, the company reported record revenues of $5.84 billion, up 24% year over year, while adjusted earnings rose 41% to a record $1.47 per share. This record growth can be attributed to rising AI-driven semiconductor demand, improving customer investments and growing complexity in advanced chip manufacturing.
Lam Research’s systems business, which includes deposition and etch equipment, continued to benefit from increasing adoption of AI accelerators, high-bandwidth memory (HBM), advanced packaging and next-generation chip architectures. In the third quarter, systems revenues grew 24% year over year to $3.73 billion. It is worth noting that AI workloads are driving significantly higher etch and deposition intensity, expanding LRCX’s served available market to slightly above the mid-30% range of WFE in 2026.
Memory-related investments remain a key growth driver. In NAND, AI data-center demand is accelerating the adoption of higher-layer-count QLC SSDs, prompting increased conversion activity for 200-layer-plus devices. Lam Research now expects most of the previously discussed $40 billion in NAND conversion spending to occur before the end of 2027. DRAM demand also remained strong, supported by HBM, DDR5 and LPDDR5 production ramps.
Lam Research guided June 2026 quarter revenues to $6.6 billion (+/- $400 million), while advanced packaging revenues are expected to grow more than 50% in calendar 2026, reinforcing confidence in sustained AI-driven systems revenue growth. The Zacks Consensus Estimate for fiscal 2026 systems revenues is pegged at $15.13 billion, indicating a year-over-year increase of approximately 32%.
How Competitors Fare Against LRCX
Lam Research competes with companies like Applied Materials (AMAT - Free Report) and ASML Holdings (ASML - Free Report) in the semiconductor equipment market.
Applied Materials is expanding collaboration with Micron Technology through its EPIC Center in Silicon Valley to accelerate next-generation DRAM, NAND and advanced packaging innovations for AI computing. The company aims to improve chip performance, power efficiency and time-to-market by co-developing advanced silicon and wafer fab equipment technologies. It also seeks to enable faster commercialization of new memory architectures for AI-driven data centers and high-performance computing. Teams from both companies will work together to accelerate development and move ideas into production faster.
ASML Holdings is experiencing strong WFE demand driven by AI-led capacity expansion in both Logic and DRAM segments. Customers are ramping leading-edge nodes using ASML Holdings’ Extreme Ultraviolet (“EUV”) systems, including NXE:3800E, with broader DRAM adoption of EUV lithography. This transition is increasing lithography intensity, reducing multi-patterning steps, improving cycle times and lowering cost per wafer, thereby reinforcing sustained demand for advanced semiconductor manufacturing tools.
LRCX’s Share Price Performance, Valuation and Estimates
Shares of Lam Research have surged 59.7% in the year-to-date period compared with the Zacks Electronics – Semiconductors industry’s 37.2% growth.
LRCX YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, Lam Research trades at a forward price-to-sales ratio of 15.85, slightly higher than the industry’s average of 15.50.
Lam Research Forward 12-Month P/S 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 37% and 36.4%, respectively. Estimates for fiscal 2026 have been revised upward over the past 30 days, while those for fiscal 2027 have been revised upward over the past seven days.
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LRCX Ups WFE View Amid AI Demand: Can It Lift Systems Revenues?
Key Takeaways
Lam Research (LRCX - Free Report) is witnessing strong momentum in wafer fabrication equipment (WFE) demand as accelerating AI infrastructure investments drive higher semiconductor capital spending across memory, foundry and logic markets. During the third-quarter fiscal 2026 earnings call, the company raised its 2026 WFE outlook to $140 billion from the prior estimate of $135 billion, citing stronger customer spending trends and continued hyperscale AI infrastructure expansion.
Rising WFE spending is driving Lam Research’s financial performance. In the third quarter of fiscal 2026, the company reported record revenues of $5.84 billion, up 24% year over year, while adjusted earnings rose 41% to a record $1.47 per share. This record growth can be attributed to rising AI-driven semiconductor demand, improving customer investments and growing complexity in advanced chip manufacturing.
Lam Research’s systems business, which includes deposition and etch equipment, continued to benefit from increasing adoption of AI accelerators, high-bandwidth memory (HBM), advanced packaging and next-generation chip architectures. In the third quarter, systems revenues grew 24% year over year to $3.73 billion. It is worth noting that AI workloads are driving significantly higher etch and deposition intensity, expanding LRCX’s served available market to slightly above the mid-30% range of WFE in 2026.
Memory-related investments remain a key growth driver. In NAND, AI data-center demand is accelerating the adoption of higher-layer-count QLC SSDs, prompting increased conversion activity for 200-layer-plus devices. Lam Research now expects most of the previously discussed $40 billion in NAND conversion spending to occur before the end of 2027. DRAM demand also remained strong, supported by HBM, DDR5 and LPDDR5 production ramps.
Lam Research guided June 2026 quarter revenues to $6.6 billion (+/- $400 million), while advanced packaging revenues are expected to grow more than 50% in calendar 2026, reinforcing confidence in sustained AI-driven systems revenue growth. The Zacks Consensus Estimate for fiscal 2026 systems revenues is pegged at $15.13 billion, indicating a year-over-year increase of approximately 32%.
How Competitors Fare Against LRCX
Lam Research competes with companies like Applied Materials (AMAT - Free Report) and ASML Holdings (ASML - Free Report) in the semiconductor equipment market.
Applied Materials is expanding collaboration with Micron Technology through its EPIC Center in Silicon Valley to accelerate next-generation DRAM, NAND and advanced packaging innovations for AI computing. The company aims to improve chip performance, power efficiency and time-to-market by co-developing advanced silicon and wafer fab equipment technologies. It also seeks to enable faster commercialization of new memory architectures for AI-driven data centers and high-performance computing. Teams from both companies will work together to accelerate development and move ideas into production faster.
ASML Holdings is experiencing strong WFE demand driven by AI-led capacity expansion in both Logic and DRAM segments. Customers are ramping leading-edge nodes using ASML Holdings’ Extreme Ultraviolet (“EUV”) systems, including NXE:3800E, with broader DRAM adoption of EUV lithography. This transition is increasing lithography intensity, reducing multi-patterning steps, improving cycle times and lowering cost per wafer, thereby reinforcing sustained demand for advanced semiconductor manufacturing tools.
LRCX’s Share Price Performance, Valuation and Estimates
Shares of Lam Research have surged 59.7% in the year-to-date period compared with the Zacks Electronics – Semiconductors industry’s 37.2% growth.
LRCX YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, Lam Research trades at a forward price-to-sales ratio of 15.85, slightly higher than the industry’s average of 15.50.
Lam Research Forward 12-Month P/S 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 37% and 36.4%, respectively. Estimates for fiscal 2026 have been revised upward over the past 30 days, while those for fiscal 2027 have been revised upward over the past seven days.
Image Source: Zacks Investment Research
Lam Research currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.