Semiconductor equipment maker Lam Research (NASDAQ: LRCX) met Wall Street’s revenue expectations in calendar Q3 2026 (fiscal Q1 2027), with sales up 54.4% year on year to $8.22 billion. The company expects next quarter’s revenue to be around $8.6 billion, close to analysts’ estimates. Its non-GAAP profit of $2.20 per share was 0.9% above analysts’ consensus estimates.
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Lam Research (LRCX) Q3 CY2026 highlights:
- Revenue: $8.22 billion vs analyst estimates of $8.18 billion (54.4% year-on-year growth, in line)
- Adjusted EPS: $2.20 vs analyst estimates of $2.18 (0.9% beat)
- Adjusted Operating Income: $3.30 billion vs analyst estimates of $3.21 billion (40.2% margin, 2.7% beat)
- Revenue Guidance for Q4 CY2026 is $8.6 billion at the midpoint, roughly in line with what analysts were expecting
- Adjusted EPS guidance for Q4 CY2026 is $2.33 at the midpoint, roughly in line with what analysts were expecting
- Operating Margin: 40%, up from 34.4% in the same quarter last year
- Free Cash Flow Margin: 39.4%, up from 29.9% in the same quarter last year
- Inventory Days Outstanding: 106, down from 120 in the previous quarter
- Market Capitalization: $329.7 billion
"With AI driving higher semiconductor demand and greater device complexity, our focus on operational execution helped Lam deliver record revenue, profit, and earnings per share in the September quarter," said Tim Archer, Lam Research's President and Chief Executive Officer. "Our strategic investments in technology inflections and manufacturing capacity are paying off, strengthening our ability to outgrow the wafer fabrication equipment market as the industry expands."
Company overview
Founded in 1980 by David Lam, the man who pioneered semiconductor etching technology, Lam Research (NASDAQ: LRCX) is one of the leading providers of wafer fabrication equipment used to make semiconductors.
Revenue growth
A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Thankfully, Lam Research’s 10.6% annualized revenue growth over the last five years was solid. Its growth surpassed the average semiconductor company and shows its offerings resonate with customers, a great starting point for our analysis. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions (which can sometimes offer opportune times to buy).
Long-term growth is the most important, but short-term results matter for semiconductors because the rapid pace of technological innovation (Moore’s Law) could make yesterday’s hit product obsolete today. Lam Research’s annualized revenue growth of 29.5% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated. 
This quarter, Lam Research’s year-on-year revenue growth of 54.4% was magnificent, and its $8.22 billion of revenue was in line with Wall Street’s estimates. Beyond meeting estimates, this marks 10 straight quarters of growth, showing that the current upcycle has had a good run - a typical upcycle usually lasts 8-10 quarters. Company management is currently guiding for a 60.9% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 40.1% over the next 12 months, an improvement versus the last two years. This projection is particularly healthy for a company of its scale and suggests its newer products and services will catalyze better top-line performance.
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Product demand & outstanding inventory
Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’s capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.
This quarter, Lam Research’s DIO came in at 106, which is 59 days below its five-year average. At the moment, these numbers show no indication of an excessive inventory buildup.
Key takeaways from Lam Research’s Q3 results
Revenue and EPS were roughly in line with expectations, as were Q4 guidance for those two metrics. The market seemed to be hoping for more, specifically more convincing beats, and the stock traded down 7.3% to $242.51 immediately after reporting.
Is Lam Research an attractive investment opportunity at the current price? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).
