Lam Research Corporation (LRCX)
OvervaluedFundamental
69
Price
$328.51
Market Cap
$384.36B
Part 1 · What the company is worth
Overview
Lam Research designs and builds the specialized machines chipmakers use to etch precise patterns into silicon wafers and deposit ultra-thin material layers on them — two of the most critical and difficult steps in manufacturing advanced semiconductors. It sells this equipment to a small group of the world's largest memory and logic chip manufacturers, then earns ongoing revenue servicing, upgrading and supplying spare parts for machines already installed and running in customers' factories.
How it makes money
Revenue comes from selling large, expensive systems — recognized when a customer accepts delivery and installation — plus a growing recurring stream of spare parts, service contracts and upgrades on the large base of machines already installed in factories. Because chipmakers only buy new equipment when expanding or upgrading capacity, systems revenue swings sharply with the semiconductor industry's spending cycle, while the customer-support business is comparatively steady and grows with the installed base.
Revenue by segment
New wafer-fabrication equipment sold to chipmakers building or expanding factories, mainly for etch and deposition process steps.
Spare parts, equipment upgrades and service contracts on machines already installed and running in customer factories.
Competitive moat
Switching costs · NarrowOnce a chip factory qualifies Lam's etch and deposition tools into its manufacturing process, switching to a rival's machine risks re-validating an entire production line at huge cost and delay, so incumbency inside an existing fab is sticky. The edge is narrow, not wide: a handful of very large customers have real bargaining power and also buy from Applied Materials and Tokyo Electron.
What drives demand
CyclicalSemiconductor capital spending is one of the most cyclical patterns in any industry, swinging between shortage-driven capacity expansion and inventory-driven pullbacks every few years as memory and logic chipmakers time their factory investments together. Lam's systems revenue rises and falls with a small number of very large customers' capex budgets rather than with steady, broad-based demand.
Key risks
- Customer concentration among a few chipmakers — A small number of very large memory and logic manufacturers account for most equipment purchases; a delay or cut in any one company's capex plan can move results significantly.
- Semiconductor spending cyclicality — The industry alternates between periods of aggressive capacity expansion and sharp pullbacks; Lam's systems orders can fall sharply and with little warning when customers pause investment.
- US export controls to China — Restrictions on selling advanced semiconductor equipment to Chinese customers have already limited some sales, and the rules can tighten further with little notice.
- Dependence on a limited supplier base — Certain critical components come from a limited number of suppliers; a shortage or quality issue at one of them can delay Lam's own equipment deliveries.
- Competition from other equipment makers — Applied Materials, Tokyo Electron and other equipment makers compete for the same customers and the same process steps, limiting how much pricing power Lam can exercise.
Customer concentration
Lam does not name individual customers in the results reviewed here, but wafer-fabrication equipment spending is concentrated among a handful of very large memory and logic chipmakers, so any one customer's capex plan can materially move results.
The case for
Buyers argue that the industry's shift to more complex 3D chip structures requires more etch and deposition steps for every new wafer, structurally increasing how much equipment like Lam's each new factory needs regardless of which chipmaker wins the broader AI race.
The case against
Sellers fear that a downturn in a handful of very large customers' capital budgets, or tighter export restrictions on China, can cut Lam's orders sharply and with little warning, given how concentrated its customer base already is.
Written by the editors, published on August 18, 2026
Direct competitors
Who this company fights with for the same customers
Generated on September 19, 2026 with claude-haiku-4-5 — shared with all users
Lam's own 10-K names Applied Materials as its primary rival in both etch and dielectric and metals deposition, selling competing wafer-fabrication tools to the same chipmakers.
Named by Lam as a primary competitor in etch and in wet clean, bidding for the same process steps at the same memory and logic fabs.
Competes directly with Lam in atomic layer deposition and PECVD tools, the film-deposition step Lam identifies as a core market in its 10-K.
Listed by Lam as a primary competitor in the wet clean market, where both supply wafer-cleaning systems to the same foundries and memory makers.
Lam's 10-K names Hitachi among its primary etch competitors; its Hitachi High-Tech unit sells plasma etch systems to the same advanced logic and memory customers.
Named by Lam as a primary wet clean competitor; the Samsung-controlled Korean supplier competes for cleaning and track tool orders at the same Asian fabs.
Balance Sheet & Liquidity
Revenue
$23.23B
Trailing 12 months (through 6/28/2026)
Net Income
$7.27B
Trailing 12 months (through 6/28/2026)
Free Cash Flow
$4.89B
Total Equity
$12.47B
Total Liabilities
$11.06B
Current Ratio
2.63
Interest Coverage
52.27
Debt/EBITDA
0.48
Earnings Per Share
Revenue & Net Income
Free Cash Flow
Income Breakdown
Historical statement
Margins over time
Debt over time
How heavy the debt is
Growth grid
Growth — Revenue
Fair Value Estimation
Fair Value
$207.31
Current Price
$328.51
Margin of Safety
-58.5%
Fair Value Range
$134.75 - $279.87
Spread across the valuation methods used, not a statistically calibrated confidence interval.
Estimation Methods
Valuation Metrics
P/E Ratio
57.03
ROE
58.3%
P/B Ratio
32.96
P/FCF
84.04
Gross Margin
50.5%
ROIC
36.8%
Profitability Radar
Value Creation (Economic Moat)
ROIC
36.8%
WACC
15.1%
ROIC − WACC
+21.8 pp
ROIC exceeds the cost of capital — the company is creating value for shareholders.
Fundamental Analysis Criteria
Passed (21)
- EPS shows upward trend
- Price CAGR 40.07%
- ROIC 36.8%
- Gross Margin 50.5%
- Debt/Equity ratio
- Operating Margin 35.3%
- Positive Free Cash Flow
- CapEx intensity
- Current Ratio
- Interest Coverage
- Debt/EBITDA
- Return on Tangible Assets
- Low reliance on intangibles
- ROE 67.0%
- Revenue Growth 5Y 9.7%
- Analyst Consensus 85% Buy
- Earnings Surprise avg 4.6%
- Earnings Quality (OCF/NI) 0.81
- Share Dilution -2.3%
- Net Margin Trend 31.3% vs 29.1%
- Piotroski F-Score 8/9
Failed (5)
- P/FCF 84.04
- P/B Ratio 32.96
- Price below Graham Number
- DCF valuation (Overvalued)
- PEG Ratio 3.16
Unavailable (1)
- Dividend Payout NaN%
Piotroski F-Score
Strong financial health
Earnings Quality
Moderate: some gap between profits and cash
Share Dilution
Buying back shares. Shareholder friendly
Institutional Holdings
Governance
Executive Team
| Name | Title | Age |
|---|---|---|
| Mr. Timothy M. Archer | President, CEO & Director | 58 |
| Mr. Douglas R. Bettinger | Executive VP & CFO | 58 |
| Mr. Seshasayee Varadarajan | Executive VP & COO | 50 |
| Ms. Ava A. Harter J.D. | Senior VP, Chief Legal Officer & Secretary | 55 |
| Ms. Christina C. Correia | Chief Accounting Officer & Group VP | 55 |
| Mr. Vahid Vahedi Ph.D. | Senior VP, Chief Technology & Sustainability Officer | 59 |
| Mr. Ram Ganesh | Vice President of Investor Relations | - |
| Mr. Steve Fine | Group VP & Chief Communication Officer | - |
| Ms. Mary Teresa Hassett | Senior VP & Chief Human Resources Officer | 51 |
| Dr. Karthikeyan Rammohan | Senior Vice President of Global Operations & Enterprise Solutions | 56 |
Audit Risk
3
Board Risk
2
Compensation Risk
4
Shareholder Rights Risk
1
Part 2 · The price and when to enter
This part won't tell you whether the company is worth owning: it helps you choose when to buy it, once the fundamentals have convinced you. Inside: technical analysis, potential, historical drawdowns, gamma exposure.
Documents
- View document
Annual Report (10-K)
A yearly overview of the business, its financial results, and the risks it faces.
Filed on 2026-08-07
- View document
Quarterly Report (10-Q)
A snapshot of financial performance for the most recent three-month period.
Filed on 2026-04-23
- View document
Current Report (8-K)
An announcement of a major event, such as a leadership change or big news.
Filed on 2026-08-27
via SEC EDGAR
Income History
via SEC EDGAR
Latest News
Recent headlines for LRCX, sourced from Markets Gazette.
- 8/26/2026POSITIVELam Research Invests $1.5 Billion in Oregon to Expand Chip R&D
Lam Research Corporation announced a significant $1.5 billion investment in Oregon to bolster its chip research and development capabilities. CEO Tim Archer highlighted the strategic importance of this expansion, driven by the escalating demand for computational power, bandwidth, and storage required by advanced AI models. This investment underscores Lam Research's commitment to semiconductor innovation and its positioning to capitalize on the accelerating pace of AI development. For investors, this move signals strong future growth prospects and reinforces the company's leadership in a critical technology sector.
- 4/24/2026POSITIVEHere's How Much You Would Have Made Owning Lam Research Stock In The Last 15 Years
Owning Lam Research Corporation (LRCX) stock over the past 15 years would have yielded substantial returns. While specific figures are not provided in the snippet, the title implies a significant positive performance, likely outperforming broader market indices. This historical performance suggests strong business execution, technological leadership in the semiconductor equipment manufacturing sector, and effective capital allocation by the company. Investors who held LRCX would have benefited from the secular growth trends in semiconductors, driven by demand for advanced computing, AI, and mobile devices.
- 4/22/2026NEUTRALLam Research Q3 2026 Earnings Call: Complete Transcript
Lam Research Corporation's Q3 2026 earnings call transcript has been released. While specific financial figures and forward-looking statements are detailed within the full transcript, the mere publication of the earnings call details does not inherently signal a positive or negative market movement. Investors will need to analyze the content for key metrics such as revenue, earnings per share, guidance, and management commentary on market conditions and future demand for wafer fabrication equipment. The transcript provides the raw material for analysis, but the market's reaction will depend on the substance of the information disclosed.
- 4/14/2026POSITIVEHere's How Much $1000 Invested In Lam Research 20 Years Ago Would Be Worth Today
An investment of $1000 in Lam Research Corporation (LRCX) made 20 years ago would have grown to an estimated $137,000 today, reflecting a remarkable compound annual growth rate (CAGR) of approximately 25%. This substantial appreciation is driven by the company's consistent performance in the semiconductor equipment manufacturing sector, marked by technological innovation and strong demand cycles for wafer fabrication equipment. Investors who held LRCX through various market conditions have benefited from its strategic positioning in a high-growth industry, underscoring the long-term wealth creation potential of well-chosen technology stocks.
- 3/27/2026POSITIVEHere's How Much $100 Invested In Lam Research 20 Years Ago Would Be Worth Today
An investment of $100 in Lam Research Corporation (LRCX) made 20 years ago would have grown to a substantial amount today, underscoring the company's significant long-term growth trajectory. While the exact current valuation is not provided in this snippet, historical performance data indicates exceptional returns for shareholders. This performance is likely driven by consistent innovation and market leadership in the semiconductor manufacturing equipment sector, a critical industry for technological advancement. Investors who held LRCX over the past two decades have benefited from the company's ability to capitalize on the increasing demand for advanced chip technologies.
- 3/5/2026POSITIVELam Research Shares Hit Intraday High After Key Trading Signal
Lam Research shares (LRCX) hit an intraday high after a significant trading signal flashed at $219.24. The stock reacted with a nearly 3% surge. This event suggests potential bullish interest from market participants, possibly triggered by technical analysis or unexpected order flows. For investors, this signal indicates a possible trend reversal or strengthening positive momentum, warranting further observation to confirm the sustainability of the move.
- 3/3/2026NEUTRALPrice Over Earnings Overview: Lam Research
Lam Research Corporation, a key player in the semiconductor equipment sector, is the focus of an analysis comparing its price to earnings. While specific figures are not provided in this excerpt, the emphasis on the price-to-earnings ratio suggests an ongoing valuation. Investors closely monitor these ratios to assess whether a stock is overvalued or undervalued relative to its profit-generating capacity. A thorough examination of this metric is crucial for determining the company's financial health and future prospects in the dynamic chip market.
via Markets Gazette