It has been about a month since the last earnings report for Lam Research (LRCX Quick QuoteLRCX - Free Report) . Shares have added about 7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Lam Research due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

LRCX Q4 Earnings Beat on NAND and Customer Support Strength

Lam Research delivered fourth-quarter fiscal 2026 non-GAAP earnings of $1.82 per share, which beat the Zacks Consensus Estimate by 7.69%. Non-GAAP earnings per share jumped nearly 37% year over year and 24% sequentially, primarily driven by strong pricing, scale efficiencies and better product mix.

Lam Research’s fourth-quarter revenues increased 30% year over year and 15% sequentially to $6.72 billion and surpassed the consensus estimate by 0.73%. NAND revenues more than doubled sequentially, while the Customer Support Business Group delivered its third consecutive quarter of record revenues.

LRCX Revenue Mix Tilts Toward Memory

Systems revenues totaled $4.25 billion, up 23.6% from the year-ago quarter. Memory accounted for 46% of systems revenues, up from 39% in the preceding quarter.

Non-volatile memory accounted for 23% of systems revenues, up from 12% in the previous quarter, as customers invested in conversions to 256-layer-and-above devices for enterprise solid-state drives. DRAM contributed 23%, with spending focused on wafer additions and upgrades across 1-alpha, 1-beta and 1-gamma nodes.

Lam Research's Foundry Business Stays Resilient

Foundry accounted for 44% of systems revenues compared with 54% in the March quarter. Leading-edge investments in 2-nanometer and 3-nanometer capabilities and advanced packaging largely offset lower mature-node spending in China.

Taiwan generated 27% of total revenues and reached a record dollar level. China contributed 26%, down from 34% sequentially, while Korea represented 20%. Japan and the United States accounted for 9% each.

LRCX Support Revenues Hit New Record

Customer support-related revenues and other revenues climbed 42.6% year over year to $2.47 billion. The business benefited primarily from record upgrade revenues, with additional growth in Reliant systems and services.

Management expects upgrades to remain strong due to NAND investment, while high industry utilization should support spares and service demand. Equipment Intelligence and Dextro maintenance automation solutions are also expanding from NAND into DRAM, creating additional service opportunities.

Lam Research Expands Profitability

Non-GAAP gross margin reached 52%, up 210 basis points sequentially. Pricing actions, operational and scale efficiencies, and favorable product mix drove the improvement.

Non-GAAP operating expenses rose to $916 million from $866 million in the prior quarter. Higher headcount and variable compensation increased spending, while research and development represented 67% of operating expenses. Despite the increase, non-GAAP operating margin expanded 340 basis points to 38.4%.

LRCX Raises WFE View on AI Demand

Management now expects calendar 2026 wafer fabrication equipment spending in the low-$150-billion range, up from its prior $140-billion outlook with an upside bias. Lam Research expects 2026 to mark a third consecutive year of relative outperformance versus industry spending.

AI-driven requirements are increasing demand for flash storage, advanced DRAM, leading-edge foundry architectures and larger chip packages. Lam Research is moving faster toward its target of a high-30% served available market share of WFE, supported by rising etch and deposition intensity.

LRCX Builds Cash While Funding Expansion

Cash, cash equivalents and restricted cash increased to $5.60 billion from $4.77 billion in the previous quarter. Operating cash flow was $1.46 billion, while capital expenditures totaled $189 million as Lam Research invested in U.S. laboratories and global manufacturing capacity. In fiscal 2026, the company generated operating cash flow of $5.86 billion.

Inventories rose to $4.28 billion from $4.00 billion in the previous quarter as the company prepared for stronger customer demand, though inventory turns improved to 3.0 from 2.9. Lam Research repurchased $246 million of shares and paid $325 million in dividends during the quarter. In fiscal 2026, it repurchased shares worth $3.85 billion and paid $1.27 billion in dividends.

Lam Research Issues Strong September Guidance

For the first quarter of fiscal 2027, Lam Research projects revenues of $8.10 billion, plus or minus $400 million. The midpoint implies growth of more than 20% from the June quarter.

The company expects non-GAAP gross margin of 52%, plus or minus one percentage point, and operating margin of 39.5%, plus or minus one point. Non-GAAP earnings are expected to be $2.15 per share, plus or minus 15 cents, based on 1.255 billion diluted shares.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a upward trend in estimates revision.

The consensus estimate has shifted 17.75% due to these changes.

VGM Scores

Currently, Lam Research has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock has a grade of F on the value side, putting it in the fifth quintile for value investors.

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

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Lam Research has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.