Lam Research shares fall 9.7% as earnings outlook misses estimates despite record revenue
Key Facts
Lam Research shares fell 9.7% during trading on Thursday, October 22, 2026, according to the Associated Press, after the company reported record September-quarter revenue but issued an earnings outlook slightly below analysts' estimates. Revenue reported on Wednesday evening totaled $8.22 billion, according to the company's earnings statement, with sales rising from both the previous quarter and the same period last year. The Associated Press said the midpoint of the earnings forecast range for the final quarter of the year was slightly below analysts' expectations. The negative reaction began in after-hours trading on Wednesday, October 21, when the stock fell 6.45% to $243.99, according to Investing's coverage of the earnings presentation. The decline then widened during Thursday's session to the level reported by the Associated Press in its market coverage. The drop came after the stock entered Thursday's session with a year-to-date gain of 52.4%, according to the news agency.
September-quarter results showed revenue growth of 22% from the previous quarter, according to Lam Research's statement issued on October 21. Revenue rose 54% from the same period a year earlier, according to Investing's coverage of the earnings presentation, marking increases on both a quarterly and annual basis. In its June-quarter earnings statement, the company had forecast September-quarter revenue of $8.10 billion, plus or minus $400 million. Actual revenue therefore exceeded the midpoint of management's previous guidance while remaining within the range the company had set at the time. Net income under U.S. generally accepted accounting principles totaled $2.75 billion in the September quarter, according to the earnings statement. Adjusted diluted earnings per share, a non-GAAP measure, were $2.20 for the same period. The adjusted operating margin was 40.2%, according to the non-GAAP measure the company reported alongside its GAAP results.
On the balance sheet, cash, cash equivalents and restricted cash rose to $7.45 billion at the end of the September quarter, according to the company's statement. Those balances stood at $5.60 billion at the end of the June quarter, marking an increase between the ends of the two fiscal periods. By geography, China accounted for 35% of Lam Research's September-quarter revenue, according to data the company published with its results. That compared with a share of 26% in the June quarter, according to the previous period's earnings statement issued on July 29. China's share of company revenue therefore rose between the two quarters, alongside the increase in total sales. Commenting on demand, Chief Executive Tim Archer said, "Artificial intelligence is driving semiconductor demand higher." Archer's comment appeared in the September-quarter earnings statement in which the company announced record revenue.
For the quarter ending December 27, 2026, Lam Research forecast revenue of $8.60 billion, plus or minus $400 million. That puts the midpoint of next quarter's sales guidance above the revenue the company generated in the September quarter, according to figures in the earnings statement. The company also forecast adjusted diluted earnings per share of $2.33, plus or minus $0.15 per share. Although that level exceeds the adjusted earnings achieved in September, the midpoint of the range was slightly below analysts' estimates, according to the Associated Press. Management said the December-quarter outlook would have been higher without supply chain constraints, according to Investing's coverage of the earnings call. Beyond the quarterly guidance, Lam Research offered a preliminary estimate that the chipmaking equipment market could exceed $200 billion in 2027, according to the site's coverage of the call. Management thus linked its outlook to supply constraints in the December quarter, alongside its preliminary estimate of the equipment market's size the following year.