Lam Falls 11.8% Despite Quarterly Revenue of $8.22 Billion
Key Facts
Lam Research shares fell 11.8% on Thursday, October 22, after the company reported revenue of $8.22 billion for the quarter ended September 27, 2026. The decline came despite the company’s quarterly earnings and revenue coming in slightly above analyst expectations, according to The Associated Press. The company’s results showed revenue rose 22% from the June quarter to $8.219 billion, compared with $6.722 billion. The company also reported a U.S. GAAP operating margin of 40.0%, compared with 37.4% in the previous quarter. Diluted earnings per share were $2.19, up from $1.81 in June, but investors focused on supply constraints and the outlook for the next quarter.
Chief Financial Officer Doug Bettinger said on the earnings call that revenue guidance for the quarter ending in December “would have been a little higher were it not for some near-term supply chain constraints that we are actively managing.” The company set the midpoint of its revenue forecast for that quarter at $8.60 billion, plus or minus $400 million. That means the strong September results did not dispel investors’ concerns about the company’s ability to convert demand into shipments in the near term. The chief executive said cleanroom space availability and constraints on some components would continue to limit chipmakers’ and manufacturing-equipment companies’ ability to fully meet demand. He said these constraints are likely to persist into 2027, putting production capacity and supply chains at the center of the sector’s outlook.
At the same time, Lam painted a picture of strong growth in spending on chipmaking equipment. The company estimated industry spending in 2026 at a midpoint of $150 billion, and said its initial outlook for 2027 exceeds $200 billion. It added that spending growth in 2027 would be led by DRAM, followed by advanced logic foundries and then NAND. It also forecast that the company’s systems revenue would grow by more than 40% year over year in 2026. This outlook links expanding capital spending to demand for Lam’s equipment, while the constraints described by management remain an obstacle to meeting that demand in full.
Pressure extended to technology stocks in Thursday’s session, with the Nasdaq Composite falling 2.6% and the S&P 500 declining 1.2%, while the Dow Jones rose less than 0.1%. Nvidia shares fell 4.4% and were the biggest single drag on the S&P 500, according to The Associated Press. Lam shares closed at $230.15, compared with $260.81 in the previous session. The stock had risen 52.4% year to date before Thursday’s decline. The agency also noted that the midpoint of Lam’s forecast range for next-quarter profit was slightly below analyst expectations, making the market more sensitive to forward guidance despite revenue and earnings growth.
Lam tied part of its outlook to the accelerating use of artificial intelligence applications, saying on the earnings call that average weekly token usage had increased about 250 times over the previous 18 months. This comes as the company expects chipmakers to increase spending on equipment, particularly for memory and advanced logic foundries. But management warned that limited cleanroom capacity and shortages of some components could continue to slow chipmakers’ and equipment companies’ ability to respond to demand. The company set the quarter ending December 27, 2026, as the next period for which it will report results, revealing how much of that demand is reflected in revenue. Its initial outlook for chipmaking equipment spending in 2027 exceeds $200 billion.