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Lam Research Q1 Earnings Beat on Systems Sales and Margin Gains
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Key Takeaways
Lam Research's Q1'27 EPS rose 74.6% to $2.20, beating estimates as revenues climbed 54.4% to $8.22B.
Systems revenues surged 61.6% to $5.73B, with NAND sales up 40% sequentially and foundry hitting a new high.
Gross margin hit a record 52.4%, free cash flow reached $3.24B, and Lam Research projected $2.33 in Q2 EPS.
Lam Research Corporation (LRCX - Free Report) reported first-quarter fiscal 2027 non-GAAP earnings of $2.20 per share, up 74.6% year over year and 20.9% sequentially. The figure surpassed the Zacks Consensus Estimate of $2.17 by 1.38%, supported by favorable product mix and improving operating leverage.
Revenues jumped 54.4% from the prior-year quarter and 22.3% sequentially to $8.22 billion, beating the consensus mark of $8.14 billion by 0.98%. Growth reflected strong foundry and NAND investments, while customer support posted its fourth consecutive quarterly revenue record.
LRCX Systems Revenues Jump on NAND Conversions
Systems revenues rose 61.6% year over year and 34.9% sequentially to $5.73 billion. Memory made up 46% of systems revenues compared with 34% a year earlier, with its dollar contribution more than doubling.
Non-volatile memory accounted for 26% of systems revenues, up from 23% in the previous quarter. NAND sales increased about 40% sequentially, benefiting from conversions to 256-layer-and-above devices and initial investments in 384-layer technology. DRAM contributed 20%, versus 23% sequentially, as spending supported DDR5 and high-bandwidth memory.
Lam Research Corporation Price, Consensus and EPS Surprise
Foundry reached record revenues, representing 46% of systems sales versus 44% in the June quarter. Demand came from leading-edge chipmaking and advanced packaging as well as mature-node capacity spending in China.
China represented 35% of total revenues, up from 26% in the previous quarter, with domestic and multinational customers contributing. Korea generated 20% of revenues, unchanged sequentially, while Taiwan accounted for 18%, down from 27%. Lam Research expects China's revenue share to fall significantly in the December quarter.
LRCX Support Revenues Reach Fourth Straight Record
Customer support-related revenues and other reached $2.49 billion, up 40% year over year and 0.6% sequentially. The Customer Support Business Group (“CSBG”) benefited from high equipment utilization, NAND upgrades and demand for spares and services.
The company's Equipment Intelligence offerings and Dextro maintenance cobots helped win performance-based contracts with multiple memory manufacturers. Management expects CSBG revenue growth of more than 30% in calendar year 2026 and more than 15% in calendar year 2027.
Lam Research's Margins Rise Despite Higher Costs
Non-GAAP gross margin climbed 180 basis points year over year and 40 basis points sequentially to a record 52.4%, aided by favorable customer and product mix. Non-GAAP operating margin reached 40.2%, rising 520 basis points year over year and 180 basis points sequentially.
Non-GAAP operating expenses increased to $1 billion from $916 million in the previous quarter, primarily on higher incentive compensation tied to profitability. The company also stepped up investment in product programs, with research and development comprising roughly two-thirds of total operating expenses. Its non-GAAP tax rate increased to 16.5% from 11%, reflecting higher U.S. taxation of foreign earnings and shifts in the geographic income mix.
LRCX Sees AI Fueling Equipment Market’s Growth
Lam Research expects calendar year 2026 wafer fabrication equipment spending in the mid-$150-billion range and projects more than $200 billion in 2027. DRAM is expected to lead growth, followed by leading-edge foundry and NAND. Management also projects calendar year 2026 systems revenue growth well above 40%.
In foundry and DRAM, its Akara etch and Aether dry resist products are gaining traction. Management lifted its cumulative Aether revenue outlook to approximately $2.5 billion by decade-end, up roughly $1 billion from its prior view. Panel plating systems have reached more than 20 customers, reflecting opportunities in advanced packaging.
Lam Research Generates Record Free Cash Flow
Operating cash flow increased to $3.50 billion from $1.46 billion in the June quarter, lifting free cash flow to a record $3.24 billion. Cash, cash equivalents and restricted cash grew to $7.45 billion from $5.60 billion.
Inventory increased to $4.55 billion from $4.28 billion as Lam Research prepared for higher demand, but inventory turns improved to 3.4 from 3.0. Capital expenditures rose to $258 million from $189 million for laboratory and manufacturing expansion. The company repurchased about $1.01 billion in shares and paid $325 million in dividends.
LRCX Projects Higher December Earnings
For the second quarter of fiscal 2027, Lam Research expects revenues of $8.60 billion, plus or minus $400 million. Non-GAAP earnings are projected at $2.33 per share, plus or minus 15 cents, based on approximately 1.253 billion shares.
The company forecasts a non-GAAP gross margin of 52.5%, plus or minus one percentage point, and an operating margin of 40.5%, plus or minus one percentage point. Management noted that December revenue guidance would have been slightly higher without near-term supply constraints, while customer mix is expected to weigh on gross margin.
LRCX’s Zacks Rank and Other Stocks to Consider
Lam Research currently carries a Zacks Rank #2 (Buy).
Shares of NVIDIA have risen 19.1% year to date (YTD). The Zacks Consensus Estimate for NVIDIA’s fiscal 2027 earnings has been revised upward by a penny to $9.30 per share over the past seven days, indicating a 95% year-over-year increase.
Shares of Micron Technology have skyrocketed 220.2% YTD. The Zacks Consensus Estimate for Micron Technology’s fiscal 2027 earnings has improved 12.2% to $177.73 per share over the past 30 days, calling for a rise of 135.3% year over year.
ASE Technology shares have surged 163.5% YTD. The Zacks Consensus Estimate for ASX’s 2026 earnings has been revised upward by 4 cents over the past 30 days to $1.27 per share, implying an increase of 122.8% year over year.
View the Zacks #1 Rank List
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Lam Research Q1 Earnings Beat on Systems Sales and Margin Gains
Key Takeaways
Lam Research Corporation (LRCX - Free Report) reported first-quarter fiscal 2027 non-GAAP earnings of $2.20 per share, up 74.6% year over year and 20.9% sequentially. The figure surpassed the Zacks Consensus Estimate of $2.17 by 1.38%, supported by favorable product mix and improving operating leverage.
Revenues jumped 54.4% from the prior-year quarter and 22.3% sequentially to $8.22 billion, beating the consensus mark of $8.14 billion by 0.98%. Growth reflected strong foundry and NAND investments, while customer support posted its fourth consecutive quarterly revenue record.
LRCX Systems Revenues Jump on NAND Conversions
Systems revenues rose 61.6% year over year and 34.9% sequentially to $5.73 billion. Memory made up 46% of systems revenues compared with 34% a year earlier, with its dollar contribution more than doubling.
Non-volatile memory accounted for 26% of systems revenues, up from 23% in the previous quarter. NAND sales increased about 40% sequentially, benefiting from conversions to 256-layer-and-above devices and initial investments in 384-layer technology. DRAM contributed 20%, versus 23% sequentially, as spending supported DDR5 and high-bandwidth memory.
Lam Research Corporation Price, Consensus and EPS Surprise
Lam Research Corporation price-consensus-eps-surprise-chart | Lam Research Corporation Quote
Lam Research's Foundry Business Hits New High
Foundry reached record revenues, representing 46% of systems sales versus 44% in the June quarter. Demand came from leading-edge chipmaking and advanced packaging as well as mature-node capacity spending in China.
China represented 35% of total revenues, up from 26% in the previous quarter, with domestic and multinational customers contributing. Korea generated 20% of revenues, unchanged sequentially, while Taiwan accounted for 18%, down from 27%. Lam Research expects China's revenue share to fall significantly in the December quarter.
LRCX Support Revenues Reach Fourth Straight Record
Customer support-related revenues and other reached $2.49 billion, up 40% year over year and 0.6% sequentially. The Customer Support Business Group (“CSBG”) benefited from high equipment utilization, NAND upgrades and demand for spares and services.
The company's Equipment Intelligence offerings and Dextro maintenance cobots helped win performance-based contracts with multiple memory manufacturers. Management expects CSBG revenue growth of more than 30% in calendar year 2026 and more than 15% in calendar year 2027.
Lam Research's Margins Rise Despite Higher Costs
Non-GAAP gross margin climbed 180 basis points year over year and 40 basis points sequentially to a record 52.4%, aided by favorable customer and product mix. Non-GAAP operating margin reached 40.2%, rising 520 basis points year over year and 180 basis points sequentially.
Non-GAAP operating expenses increased to $1 billion from $916 million in the previous quarter, primarily on higher incentive compensation tied to profitability. The company also stepped up investment in product programs, with research and development comprising roughly two-thirds of total operating expenses. Its non-GAAP tax rate increased to 16.5% from 11%, reflecting higher U.S. taxation of foreign earnings and shifts in the geographic income mix.
LRCX Sees AI Fueling Equipment Market’s Growth
Lam Research expects calendar year 2026 wafer fabrication equipment spending in the mid-$150-billion range and projects more than $200 billion in 2027. DRAM is expected to lead growth, followed by leading-edge foundry and NAND. Management also projects calendar year 2026 systems revenue growth well above 40%.
In foundry and DRAM, its Akara etch and Aether dry resist products are gaining traction. Management lifted its cumulative Aether revenue outlook to approximately $2.5 billion by decade-end, up roughly $1 billion from its prior view. Panel plating systems have reached more than 20 customers, reflecting opportunities in advanced packaging.
Lam Research Generates Record Free Cash Flow
Operating cash flow increased to $3.50 billion from $1.46 billion in the June quarter, lifting free cash flow to a record $3.24 billion. Cash, cash equivalents and restricted cash grew to $7.45 billion from $5.60 billion.
Inventory increased to $4.55 billion from $4.28 billion as Lam Research prepared for higher demand, but inventory turns improved to 3.4 from 3.0. Capital expenditures rose to $258 million from $189 million for laboratory and manufacturing expansion. The company repurchased about $1.01 billion in shares and paid $325 million in dividends.
LRCX Projects Higher December Earnings
For the second quarter of fiscal 2027, Lam Research expects revenues of $8.60 billion, plus or minus $400 million. Non-GAAP earnings are projected at $2.33 per share, plus or minus 15 cents, based on approximately 1.253 billion shares.
The company forecasts a non-GAAP gross margin of 52.5%, plus or minus one percentage point, and an operating margin of 40.5%, plus or minus one percentage point. Management noted that December revenue guidance would have been slightly higher without near-term supply constraints, while customer mix is expected to weigh on gross margin.
LRCX’s Zacks Rank and Other Stocks to Consider
Lam Research currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader Zacks Computer and Technology sector are NVIDIA (NVDA - Free Report) , Micron Technology (MU - Free Report) and ASE Technology (ASX - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of NVIDIA have risen 19.1% year to date (YTD). The Zacks Consensus Estimate for NVIDIA’s fiscal 2027 earnings has been revised upward by a penny to $9.30 per share over the past seven days, indicating a 95% year-over-year increase.
Shares of Micron Technology have skyrocketed 220.2% YTD. The Zacks Consensus Estimate for Micron Technology’s fiscal 2027 earnings has improved 12.2% to $177.73 per share over the past 30 days, calling for a rise of 135.3% year over year.
ASE Technology shares have surged 163.5% YTD. The Zacks Consensus Estimate for ASX’s 2026 earnings has been revised upward by 4 cents over the past 30 days to $1.27 per share, implying an increase of 122.8% year over year.