Key Highlights

  • Lam Research (NASDAQ: LRCX) fell more than 7% premarket after record quarterly Revenue of $8.22 billion.
  • Earnings of $2.20 a share beat the $2.18 estimate; December-quarter revenue guidance is $8.2 billion to $9.0 billion.
  • Supply bottlenecks are holding back revenue, and China sales are expected to fall substantially.
  • The stock had gained nearly 80% over the past year heading into the report.

Lam Research Corp. (NASDAQ: LRCX) tumbled more than 7% in premarket trading on Thursday, reaching about $239 to $240 from Wednesday’s close of $260.81, after the chip-equipment maker posted a record quarter but gave a December guide that failed to impress.

Some premarket tallies showed a drop of nearly 9%. It was the worst reaction among the large-cap tech names that reported this week and highlighted how demanding investors have become.

A Beat on Every Line

Lam reported fiscal first-quarter revenue of $8.22 billion, up 22% from the prior quarter, against estimates of about $8.13 billion to $8.15 billion. Adjusted Earnings were $2.20 a share, against $2.18 expected. Non-GAAP gross Margin rose 40 basis points to 52.4% and Operating Margin reached 40.2%. Chief Executive Officer Tim Archer attributed the strength to AI Demand and rising chip complexity.

Why Investors Sold

The reaction came from the outlook. Lam guided to December-quarter revenue of $8.2 billion to $9.0 billion, with a midpoint of $8.6 billion, compared with a consensus of about $8.53 billion, Benzinga reported. It forecast an operating margin of 40.5%, plus or minus one point, and adjusted earnings of $2.18 to $2.48 a share against an estimate of $2.31.

The guide is wide, and the company said Supply bottlenecks and potential shipment delays are holding back revenue. Some investors wanted a tighter range. Management also expects China revenue to drop substantially in the current quarter, TradingKey reported. China made up 35% of sales in the quarter, followed by Korea at 20% and Taiwan at 18%.

A Stock That Had Run

Expectations were high. Lam shares had gained nearly 80% over the past year heading into the report, though they had slumped this month: the stock fell to about $263 last week, its lowest since late July, and roughly 40% below its high for the year, according to chart analysts. Evercore ISI cut its price target to $315 from $355 ahead of the report while keeping an Outperform rating, citing concerns about 2027 chip-equipment spending.

The Longer-Term Picture

The long-term message was positive. Lam said systems revenue should grow more than 40% in 2026 and that global wafer fabrication equipment spending should reach the mid-$150 billion range, and it gave a constructive first view of 2027 industry spending. Its fiscal 2026 revenue was $23.23 billion, up 26%.

Analysts Stay Constructive

Sell-side opinion remains favorable: one analyst rates the stock Strong Buy, 26 rate it Buy and five rate it Hold, with an average price target near $365, according to MarketBeat. Those targets predate the report and may be revised after the guidance.

A Rotation Out of Chips

The drop fits a broader pattern. Chip stocks suffered their longest losing streak since 2008 earlier this month, and Thursday brought another round of selling, with Nvidia Corp. (NASDAQ: NVDA) down 2% and Nasdaq 100 futures off 1.6%. Rising oil prices and Treasury yields near 5.1% have added to worries about financing costs for AI infrastructure.

What to Watch

Investors will look for supply-chain updates, signs of how fast the China decline develops, and customer commentary on 2027 spending plans. Peers such as Applied Materials and KLA report in the coming weeks and will show whether Lam’s supply constraints are company-specific or industry-wide.

Disclaimer: This content is for informational purposes only and does not constitute financial advice or a recommendation to buy, sell, or hold any security, currency or commodity. Prices, probabilities and estimates are from third-party sources, change quickly and may differ by provider. Investors should conduct their own research and consult a licensed financial adviser before making Investment decisions.