Lam Research (LRCX) Stock Jumps After Blowing Past Q3 Estimates

TLDR

• Lam Research posted fiscal Q3 EPS of $1.47, beating the $1.36 estimate, with revenue of $5.84 billion — up 24% year-over-year.
• Q4 guidance came in well above Wall Street consensus on both sales and earnings.
• Gross margins improved ~100 basis points to 50.5%, driven by mix and efficiency gains.
• BofA raised its price target to $330 from $285, maintaining a Buy rating, and lifted its 2027 EPS estimate by 33%.
• The stock has surged over 300% in the past year and is trading near its 52-week high of $273.50.

Lam Research beat Wall Street expectations across the board in its fiscal third quarter, sending the stock higher in premarket trading Thursday. The chip equipment maker reported EPS of $1.47 against a consensus estimate of $1.36, and revenue of $5.84 billion versus the expected $5.75 billion — a 24% rise year-over-year.

Lam Research Corporation, LRCX

Q4 guidance was the real headline grabber. Sales and earnings guidance came in well above what analysts had penciled in — roughly 9% and 14% ahead of consensus, respectively. That kind of beat-and-raise is what the market was looking for.

CEO Tim Archer used the earnings call to make his case for why Lam is sitting in a sweet spot. “For Lam, the AI driven demand environment is creating an ideal setup for continued outperformance,” he said. He also pointed to 2027 shaping up well, telling investors “it feels like it’s setting up to be a pretty good year.”

Margins and Analyst Reaction

Gross margins came in at 50.5%, up around 100 basis points, helped by better product mix and internal efficiencies. That improvement caught the attention of BofA Securities analyst Vivek Arya, who raised the price target to $330 from $285 while keeping a Buy rating.

BofA also lifted its calendar year 2026 EPS estimate by 12% to $9.21 and its 2027 estimate by 33% to $10.31. The new $330 target is based on 36 times 2027 earnings. Arya noted that Lam’s customers are now having planning conversations about calendar year 2028 with confidence — a sign the upcycle has legs.

BofA also raised its 2026 wafer fabrication equipment market estimate to $140 billion from $135 billion, expecting Lam to outgrow the broader industry through its etch and deposition portfolio and continued market share gains.

What’s Driving Demand

Lam makes equipment for the etching stage of chip production — the process that carves microscopic transistors into silicon wafers. Its main competitors in this space are Applied Materials and Tokyo Electron.

The company has historically moved with consumer electronics cycles. That story has changed. Since late 2023, AI data center buildout has become the dominant driver, pulling in sustained demand from customers like TSMC and Micron, both of which are accelerating capital spending this year and into 2026.

If Wall Street’s numbers hold, Lam is on track for its third consecutive quarter of record sales.

The stock was up 1.3% in premarket trading Thursday and currently sits near its 52-week high of $273.50, with the stock trading at $265.55. The average analyst price target stands at $286, though BofA’s new $330 target sits well above that. The stock trades at a P/E of 54.32 times earnings.

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