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Lam Research Sees Record Foundry Sales: Can the Momentum Continue?
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Key Takeaways
Lam Research's foundry revenues hit a record in fiscal Q1'27, with its share of Systems sales rising to 46%.
AI-driven chip complexity, advanced packaging and China's mature-node spending are driving equipment demand.
LRCX expects 2027 WFE spending to top $200B, though cleanroom and component shortages pose risks.
Lam Research Corporation (LRCX - Free Report) is benefiting from rising demand for advanced semiconductor manufacturing equipment. In the first quarter of fiscal 2027, its foundry business achieved record revenues, while the foundry's share of Systems revenues increased to 46% from 44% in the previous quarter. Demand came from leading-edge chipmaking and advanced packaging as well as mature-node capacity spending in China. The company’s total Systems revenues soared 34.9% sequentially to $5.73 billion.
Advanced logic chips are becoming more complex as artificial intelligence (AI) workloads require greater computing power. This trend increases demand for advanced patterning, deposition and etch equipment, where Lam Research has established capabilities. Advanced packaging also creates opportunities as chipmakers seek better performance and power efficiency. LRCX's investments in these technologies could help it win more equipment orders and expand its market opportunity.
The broader outlook is encouraging. Lam Research expects wafer fabrication equipment (WFE) spending to exceed $200 billion in calendar year 2027, up from the mid-$150 billion range expected for 2026. Management also identified leading-edge foundry and logic, alongside DRAM, as major sources of future growth. However, cleanroom shortages and supply constraints affecting certain components could limit the industry's ability to meet demand.
Rising AI-related demand and greater chipmaking complexity provide longer-term support for Lam Research’s prospects. Rising mature-node capacity spending in China could further boost foundry revenues.
The Zacks Consensus Estimate for Lam Research’s fiscal 2027 and 2028 revenues is currently pegged at $34.66 billion and $41.38 billion, respectively. The consensus mark for fiscal 2027 and 2028 top lines indicates year-over-year growth of 49.2% and 19.4%, respectively.
How Applied Materials and KLA Compete With Lam Research
Applied Materials, Inc. (AMAT - Free Report) competes with Lam Research in semiconductor manufacturing equipment used to make advanced chips. Its tools support materials engineering, leading-edge foundry production and advanced packaging.
In the third quarter of fiscal 2026, Applied Materials reported record revenues of $9.12 billion, up 25% year over year. Non-GAAP earnings per share climbed 41% year over year to $3.50. Its growth outlook highlights strong demand for advanced foundry and logic equipment, making it a serious competitor as chipmakers expand capacity.
KLA Corporation (KLAC - Free Report) offers a different but relevant competitive challenge through inspection and process-control equipment that helps chipmakers detect defects and improve production yields.
In the fourth quarter of fiscal 2026, KLA’s revenues increased 15.2% year over year to $3.66 billion. Results benefited from AI infrastructure investment, leading-edge foundry/logic demand and rising process control intensity. Advanced packaging process control revenues are now expected to reach about $1.1 billion in calendar year 2026. The company’s non-GAAP earnings increased 11.7% year over year to $1.05 per share.
Applied Materials competes more directly in equipment manufacturing, while KLA benefits from the growing need for chip quality control. Their growth underscores the opportunity and competitive pressure for Lam Research as foundry spending rises.
LRCX’s Share Price Performance, Valuation and Estimates
Lam Research shares have rallied 40.7% year to date compared with the Zacks Electronics – Semiconductors industry’s 12.5% rise.
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 34.54, significantly higher than the industry’s average of 11.27.
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 year-over-year increases of approximately 65.1% and 23.9%, respectively. Estimates for fiscal 2027 and 2028 have been revised upward over the past seven days.
View the Zacks #1 Rank List
Image: Shutterstock
Lam Research Sees Record Foundry Sales: Can the Momentum Continue?
Key Takeaways
Lam Research Corporation (LRCX - Free Report) is benefiting from rising demand for advanced semiconductor manufacturing equipment. In the first quarter of fiscal 2027, its foundry business achieved record revenues, while the foundry's share of Systems revenues increased to 46% from 44% in the previous quarter. Demand came from leading-edge chipmaking and advanced packaging as well as mature-node capacity spending in China. The company’s total Systems revenues soared 34.9% sequentially to $5.73 billion.
Advanced logic chips are becoming more complex as artificial intelligence (AI) workloads require greater computing power. This trend increases demand for advanced patterning, deposition and etch equipment, where Lam Research has established capabilities. Advanced packaging also creates opportunities as chipmakers seek better performance and power efficiency. LRCX's investments in these technologies could help it win more equipment orders and expand its market opportunity.
The broader outlook is encouraging. Lam Research expects wafer fabrication equipment (WFE) spending to exceed $200 billion in calendar year 2027, up from the mid-$150 billion range expected for 2026. Management also identified leading-edge foundry and logic, alongside DRAM, as major sources of future growth. However, cleanroom shortages and supply constraints affecting certain components could limit the industry's ability to meet demand.
Rising AI-related demand and greater chipmaking complexity provide longer-term support for Lam Research’s prospects. Rising mature-node capacity spending in China could further boost foundry revenues.
The Zacks Consensus Estimate for Lam Research’s fiscal 2027 and 2028 revenues is currently pegged at $34.66 billion and $41.38 billion, respectively. The consensus mark for fiscal 2027 and 2028 top lines indicates year-over-year growth of 49.2% and 19.4%, respectively.
How Applied Materials and KLA Compete With Lam Research
Applied Materials, Inc. (AMAT - Free Report) competes with Lam Research in semiconductor manufacturing equipment used to make advanced chips. Its tools support materials engineering, leading-edge foundry production and advanced packaging.
In the third quarter of fiscal 2026, Applied Materials reported record revenues of $9.12 billion, up 25% year over year. Non-GAAP earnings per share climbed 41% year over year to $3.50. Its growth outlook highlights strong demand for advanced foundry and logic equipment, making it a serious competitor as chipmakers expand capacity.
KLA Corporation (KLAC - Free Report) offers a different but relevant competitive challenge through inspection and process-control equipment that helps chipmakers detect defects and improve production yields.
In the fourth quarter of fiscal 2026, KLA’s revenues increased 15.2% year over year to $3.66 billion. Results benefited from AI infrastructure investment, leading-edge foundry/logic demand and rising process control intensity. Advanced packaging process control revenues are now expected to reach about $1.1 billion in calendar year 2026. The company’s non-GAAP earnings increased 11.7% year over year to $1.05 per share.
Applied Materials competes more directly in equipment manufacturing, while KLA benefits from the growing need for chip quality control. Their growth underscores the opportunity and competitive pressure for Lam Research as foundry spending rises.
LRCX’s Share Price Performance, Valuation and Estimates
Lam Research shares have rallied 40.7% year to date compared with the Zacks Electronics – Semiconductors industry’s 12.5% rise.
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 34.54, significantly higher than the industry’s average of 11.27.
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 year-over-year increases of approximately 65.1% and 23.9%, respectively. Estimates for fiscal 2027 and 2028 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.