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Lam Research's DRAM Push Gains Steam: Can It Boost Growth Further?
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Key Takeaways
Lam Research is expanding its DRAM position as AI drives HBM and next-generation memory demand.
DRAM was 23% of fiscal Q4 systems revenues, with revenues staying near Q3's record level.
Akara's installed base doubled annually since launch, with LRCX expecting that trend to continue in 2027.
Lam Research Corporation (LRCX - Free Report) is strengthening its position in the DRAM (Dynamic Random Access Memory) market as artificial intelligence (AI) drives demand for high-bandwidth memory (HBM) and next-generation memory technologies. The opportunity is becoming more important as memory makers invest in capacity additions and technology upgrades across 1-alpha, 1-beta and 1-gamma DRAM nodes, supporting DDR5, LPDDR5 and HBM.
DRAM accounted for 23% of Lam Research’s systems revenues in the fourth quarter of fiscal 2026 compared with 27% in the previous quarter. Although the share declined, DRAM revenues remained near the record level reached in the third quarter, showing that demand remains solid.
Lam Research is also expanding its technology footprint. Its VECTOR platform is gaining adoption for hard-mask deposition and diffusion-barrier applications, while Akara is winning advanced DRAM etch opportunities. These tools are designed for increasingly complex memory structures, giving LRCX more opportunities to capture spending as manufacturers move to newer nodes. During the last earnings call, management revealed that Akara’s installed base doubled annually since its launch and expects that growth trend to continue in 2027.
The broader financial picture also supports the growth case. Lam Research posted fourth-quarter revenues of $6.72 billion, up 15.1% sequentially, while non-GAAP operating margin expanded 340 basis points to 38.4%. The company now expects 2026 wafer fabrication equipment spending to reach the low-$150 billion range, up from its prior projection of $140 billion.
Overall, Lam Research’s expanding DRAM exposure could become an important growth driver, particularly if AI-related HBM demand continues to push memory makers toward more advanced manufacturing technologies. The Zacks Consensus Estimate for fiscal 2027 revenues is currently pegged at $34.48 billion, indicating a 48.4% year-over-year increase.
Applied Materials and KLA: Can They Challenge LRCX in DRAM?
Lam Research faces strong competition in the growing DRAM equipment market, particularly from Applied Materials, Inc. (AMAT - Free Report) and KLA Corporation (KLAC - Free Report) .
Applied Materials is a major rival across deposition and other process steps and is benefiting from rising HBM demand. In the third quarter of fiscal 2026, Applied Materials’ total revenues jumped 25% year over year to $9.12 billion, while its semiconductor systems segment’s revenues rose 27% to $7.04 billion.
Applied Materials’ DRAM segment accounted for 26% of semiconductor systems’ revenues during the third quarter. DRAM revenues jumped 52% year over year, mainly benefiting from increasing memory requirements of AI infrastructure.
KLA is another important competitor because its process-control tools help memory manufacturers improve yields as DRAM structures become more complex. The company is well positioned to benefit from rising spending on advanced memory and HBM, although its exposure differs from Lam Research’s focus on etch and deposition.
In the last reported results for the fourth quarter of fiscal 2026, KLA revenues soared 15% year over year to $3.66 billion, while its semiconductor process control systems segment’s revenues rose 13% to $3.26 billion. Memory accounted for 21% of semiconductor process control systems’ revenues, reflecting demand for HBM and increasingly complex DRAM manufacturing processes.
LRCX’s Share Price Performance, Valuation and Estimates
Shares of Lam Research have surged 100.4% year to date compared with the Zacks Electronics – Semiconductors industry’s rise of 34.1%.
Lam Research YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, Lam Research trades at a forward price-to-earnings ratio of 35.83, significantly higher than the industry’s average of 14.58.
Lam Research Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Lam Research’s fiscal 2027 and 2028 earnings implies a year-over-year increase of approximately 60.4% and 21.7%, respectively. Estimates for fiscal 2027 and 2028 have been revised upward over the past 30 days.
View the Zacks #1 Rank List
Image: Bigstock
Lam Research's DRAM Push Gains Steam: Can It Boost Growth Further?
Key Takeaways
Lam Research Corporation (LRCX - Free Report) is strengthening its position in the DRAM (Dynamic Random Access Memory) market as artificial intelligence (AI) drives demand for high-bandwidth memory (HBM) and next-generation memory technologies. The opportunity is becoming more important as memory makers invest in capacity additions and technology upgrades across 1-alpha, 1-beta and 1-gamma DRAM nodes, supporting DDR5, LPDDR5 and HBM.
DRAM accounted for 23% of Lam Research’s systems revenues in the fourth quarter of fiscal 2026 compared with 27% in the previous quarter. Although the share declined, DRAM revenues remained near the record level reached in the third quarter, showing that demand remains solid.
Lam Research is also expanding its technology footprint. Its VECTOR platform is gaining adoption for hard-mask deposition and diffusion-barrier applications, while Akara is winning advanced DRAM etch opportunities. These tools are designed for increasingly complex memory structures, giving LRCX more opportunities to capture spending as manufacturers move to newer nodes. During the last earnings call, management revealed that Akara’s installed base doubled annually since its launch and expects that growth trend to continue in 2027.
The broader financial picture also supports the growth case. Lam Research posted fourth-quarter revenues of $6.72 billion, up 15.1% sequentially, while non-GAAP operating margin expanded 340 basis points to 38.4%. The company now expects 2026 wafer fabrication equipment spending to reach the low-$150 billion range, up from its prior projection of $140 billion.
Overall, Lam Research’s expanding DRAM exposure could become an important growth driver, particularly if AI-related HBM demand continues to push memory makers toward more advanced manufacturing technologies. The Zacks Consensus Estimate for fiscal 2027 revenues is currently pegged at $34.48 billion, indicating a 48.4% year-over-year increase.
Applied Materials and KLA: Can They Challenge LRCX in DRAM?
Lam Research faces strong competition in the growing DRAM equipment market, particularly from Applied Materials, Inc. (AMAT - Free Report) and KLA Corporation (KLAC - Free Report) .
Applied Materials is a major rival across deposition and other process steps and is benefiting from rising HBM demand. In the third quarter of fiscal 2026, Applied Materials’ total revenues jumped 25% year over year to $9.12 billion, while its semiconductor systems segment’s revenues rose 27% to $7.04 billion.
Applied Materials’ DRAM segment accounted for 26% of semiconductor systems’ revenues during the third quarter. DRAM revenues jumped 52% year over year, mainly benefiting from increasing memory requirements of AI infrastructure.
KLA is another important competitor because its process-control tools help memory manufacturers improve yields as DRAM structures become more complex. The company is well positioned to benefit from rising spending on advanced memory and HBM, although its exposure differs from Lam Research’s focus on etch and deposition.
In the last reported results for the fourth quarter of fiscal 2026, KLA revenues soared 15% year over year to $3.66 billion, while its semiconductor process control systems segment’s revenues rose 13% to $3.26 billion. Memory accounted for 21% of semiconductor process control systems’ revenues, reflecting demand for HBM and increasingly complex DRAM manufacturing processes.
LRCX’s Share Price Performance, Valuation and Estimates
Shares of Lam Research have surged 100.4% year to date compared with the Zacks Electronics – Semiconductors industry’s rise of 34.1%.
Lam Research YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, Lam Research trades at a forward price-to-earnings ratio of 35.83, significantly higher than the industry’s average of 14.58.
Lam Research Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Lam Research’s fiscal 2027 and 2028 earnings implies a year-over-year increase of approximately 60.4% and 21.7%, respectively. Estimates for fiscal 2027 and 2028 have been revised upward over the past 30 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.