Lam Research (NasdaqGS: LRCX) Up 7.2% After AI-Fueled Beat: What Managers Should Track Next
Lam Research posted revenue of US$5.32 billion and net income of US$1.57 billion for the quarter ended September 28, 2025. Both figures topped consensus and revenue rose 27% year over year. AI-driven demand in memory (NAND and DRAM) is the core driver, even after a US$200 million hit from U.S. export restrictions to China.
What changed this quarter
- Revenue: US$5.32b; Net income: US$1.57b; both ahead of analyst expectations.
- YoY growth: +27% revenue, supported by higher memory equipment demand tied to AI servers and data infrastructure.
- China headwind: ~US$200m revenue impact from export restrictions; growth elsewhere more than offset the drag.
- Impairment: US$5.29m in long-lived assets-immaterial relative to results.
Why this matters for leadership teams
AI server build-outs require more NAND capacity and high-bandwidth DRAM, which pulls forward orders for Lam's etch and deposition tools. That signals improving memory capex, better fab utilization, and a healthier order pipeline across the supply chain. If you manage budgets tied to data infrastructure, this is a concrete demand signal, not a headline.
Guidance points to continued strength
Management guided December-quarter revenue to US$5.20 billion, plus or minus US$300 million-above Street expectations. Management also emphasized product innovation and mix to support margins despite regional headwinds and sector cyclicality. The takeaway: near-term demand remains firm, led by AI-related memory.
Main risk: China exposure is real
Export restrictions already trimmed US$200 million from the quarter. Any incremental tightening, customer reconfigurations, or delays in licenses could slow shipments and push out revenue recognition. Scenario planning should assume a range of outcomes for China sales and related supply chain adjustments.
What needs to happen by 2028
The current narrative targets US$23.6 billion in revenue and US$6.7 billion in earnings by 2028. That implies ~8.5% annual revenue growth and a US$1.3 billion increase in earnings from about US$5.4 billion today. Hitting that path requires sustained AI capex, memory node transitions (3D NAND, HBM DRAM), and a product mix that supports gross margin expansion.
Valuation snapshot
One fair value estimate sits near US$130.96, which implies roughly 14% downside versus the current price. Investor estimates vary widely-from about US$66 to US$135-as views differ on China risk and customer concentration. Treat this spread as a sensitivity band, not a verdict.
Operator and investor checklist
- Memory signals: DRAM/NAND pricing trends and utilization rates; watch Micron, Samsung, and SK hynix capex updates.
- HBM and AI servers: Shipment trajectories at major GPU vendors and AI data center builders.
- Export policy: Any updates from U.S. authorities that affect China-bound tools, licenses, or exemptions.
- Orders and backlog: Book-to-bill, backlog duration, and regional mix.
- Margins: Gross margin trajectory as memory mix improves; cost controls and productivity gains.
- Customer concentration: Revenue share from top accounts and signs of multi-sourcing by key customers.
Resources
This content is general information based on historical data and forward-looking statements and is not financial advice. It does not consider your objectives or financial situation.
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