Lam Research (LRCX) — Earnings Preview Memo
Key Points Table
| Factor | Details & Signals to Watch |
|---|---|
| Q4 2026 Guidance | Revenue: $6.60B ± $400M; Gross Margin: 50.5% ± 1%; Op Margin: 36.5% ± 1%; EPS: $1.65 ± $0.15 |
| Consensus Q4 2026 | Revenue: $6,662M; Gross Margin: 50.5%; EBITDA: $2,571M; Net Income: $2,098M; EPS: $1.67 |
| Q3 2026 Actuals | Revenue: $5,841M; Gross Margin: 49.9%; Op Margin: 35.0%; EPS: $1.47 |
| YoY Comparison | Q3 2026 revenue +24% YoY; Q4 2026 faces a strong comp (+33% YoY vs Q4 2025 actual $5,171M) |
| WFE Market Signal | Management now expects 2026 WFE at $140B+ (up from $135B), with bias to upside; clean room constraints key |
| CSBG Growth | Customer Support Business Group (CSBG) hit $2.1B in Q3 2026 (+25% YoY); upgrades and spares remain strong |
| Mix/China | China revenue expected to decline as % of total; mix shift toward global multinationals and leading edge |
| Margin Durability | Gross margin guided to remain at/above 50% for Q4 2026; management signals this is sustainable near term |
| 2027 Visibility | Management signals robust demand visibility into 2027; expects another year of compelling WFE growth |
Summary and Conclusions
- Lam Research enters Q4 2026 with strong momentum: Q3 2026 delivered record revenue ($5,841M, +24% YoY), gross margin (49.9%), and EPS ($1.47, +16% QoQ).
- Guidance for Q4 2026 is robust: Revenue guided to $6.60B ± $400M, gross margin 50.5% ± 1%, operating margin 36.5% ± 1%, and EPS $1.65 ± $0.15. Consensus is closely aligned.
- Year-over-year comparables are tough: Q4 2026 faces a strong comp against Q4 2025 ($5,171M actual revenue), but the guide implies ~+28% YoY growth at the midpoint.
- WFE market outlook has improved: Management now expects 2026 WFE at $140B+ (up from $135B), with upside bias as customers find incremental clean room capacity.
- CSBG and installed base are key drivers: CSBG revenue reached $2.1B in Q3 2026 (+25% YoY), with upgrades and spares benefiting from high fab utilization and a growing installed base.
- Gross margin strength is expected to persist: Management guides for gross margin at 50.5% in Q4 2026, and signals this level is sustainable through the year.
- China mix is declining: China revenue as a % of total is expected to decrease as global multinationals and leading-edge investments drive growth.
- 2027 setup is positive: Management commentary highlights robust demand visibility into 2027, with expectations for another year of strong WFE growth as clean room constraints ease.
Most Important Factors to Watch Next Quarter
| Factor | What to Watch / Why It Matters |
|---|---|
| Revenue Growth Trajectory | Is Q4 2026 revenue ($6.60B guide) achieved or exceeded? Signals continued outperformance vs. tough comps. |
| Gross Margin Sustainability | Does gross margin remain at/above 50% as guided? Watch for mix/tariff headwinds and pricing discipline. |
| CSBG Momentum | Is CSBG revenue sustaining $2B+ per quarter? Look for continued upgrades, spares, and advanced services growth. |
| Installed Base Expansion | Chamber count growth (now >100,000) drives recurring CSBG revenue; watch for new tool shipments. |
| Mix Shift (China/Global) | Is China revenue % declining as expected? Are global multinationals and leading edge driving incremental sales? |
| WFE Market Commentary | Any further upward revisions to 2026 WFE outlook? Signals for 2027 demand and supply chain readiness. |
| Capacity/Execution Updates | Progress on Malaysia factory #2 ramp, supply chain bottlenecks, and ability to meet accelerating demand. |
| Advanced Packaging/DRAM/NAND | Growth in advanced packaging (guided +50% in 2026), DRAM (HBM4/4E), and NAND upgrades/greenfield adds. |
| Operating Leverage | Is operating margin expanding with revenue? Watch for R&D and OpEx discipline as topline grows. |
| Capital Returns | Continuation of 85%+ FCF return policy, dividend growth, and buyback pace. |
Quarterly Financial Snapshot — Actuals and Guidance
Quarterly Results and Guidance (Latest Periods)
| Quarter | Revenue ($M) | Gross Margin (%) | Op Margin (%) | EPS ($) | CSBG Revenue ($M) | China Revenue (%) | Notes |
|---|---|---|---|---|---|---|---|
| Q4 2026E | 6,600* | 50.5* | 36.5* | 1.65* | Company guidance, midpoint | ||
| Q3 2026A | 5,841 | 49.9 | 35.0 | 1.47 | 2,111 | 34 | Record CSBG, strong DRAM/packaging |
| Q2 2026A | 5,345 | 49.7 | 34.3 | 1.27 | 1,987 | 35 | |
| Q1 2026A | 5,324 | 50.6 | 35.0 | 1.26 | 1,777 | 43 | |
| Q4 2025A | 5,171 | 50.3 | 34.4 | 1.33 | 1,734 | 35 | Prior year comp |
*Guidance midpoints
Full-Year Financials — Actuals and Consensus
| Fiscal Year | Revenue ($M) | Gross Margin (%) | EBITDA ($M) | Net Income ($M) | EPS ($) | Notes |
|---|---|---|---|---|---|---|
| FY2026E | 23,197* | 50.2* | 8,670* | 7,170* | 5.61* | Consensus, not actuals |
| FY2025A | 18,255 | 48.6 | 6,236 | 5,178 | 4.00 | Restated actuals |
| FY2024A | 14,873 | 47.9 | 4,750 | 3,926 | 28.57 |
*Consensus estimates
Segment and Regional Mix Trends
| Quarter | Foundry % of Systems | Memory % of Systems | DRAM % of Systems | NAND % of Systems | Logic/Other % | China % of Total | Notes |
|---|---|---|---|---|---|---|---|
| Q3 2026A | 54 | 39 | 27 | 12 | 7 | 34 | DRAM record, NAND up QoQ |
| Q2 2026A | 59 | 34 | 23 | 11 | 7 | 35 | |
| Q1 2026A | 60 | 34 | 16 | 18 | 6 | 43 | |
| Q4 2025A | 52 | 41 | 14 | 20 | 9 | 35 |
What to Watch for in the Print
- Revenue and Margin Delivery: Does LRCX deliver on or exceed the $6.60B revenue and 50.5% gross margin guidance? Any upside surprise would reinforce the outperformance narrative.
- CSBG/Installed Base: Is CSBG revenue sustained above $2B? Are upgrades and spares still growing faster than installed base chamber count?
- Mix and China Exposure: Is China revenue % declining as expected? Is growth coming from global multinationals and leading-edge foundry/logic/DRAM?
- Advanced Packaging/DRAM/NAND: Are advanced packaging revenues tracking to +50% YoY growth? Is DRAM (especially HBM4/4E) and NAND upgrade activity accelerating as guided?
- Operating Leverage: Is operating margin expanding with topline growth? Are R&D and OpEx investments disciplined?
- Supply Chain/Capacity: Any updates on Malaysia factory #2 ramp, supply chain bottlenecks, or lead times? Is Lam able to meet accelerating customer demand?
- Capital Returns: Is the company maintaining its 85%+ FCF return policy, growing the dividend, and executing on buybacks?
- 2027 Outlook: Any incremental color on 2027 WFE growth, clean room constraint easing, or customer slotting/visibility?
Last Year’s Performance and YoY Comparables
- Q4 2025 Actuals: Revenue $5,171M, Gross Margin 50.3%, Op Margin 34.4%, EPS $1.33.
- Q4 2026 Guide/Consensus: Revenue $6,600M (+28% YoY at midpoint), Gross Margin 50.5%, Op Margin 36.5%, EPS $1.65.
- YoY Comp: Q4 2026 faces a strong comparable, but the guide implies another quarter of robust double-digit growth.
