Lam Research (LRCX) Stock Price Jumps On Record Margins And AI Demand

Lam Research just ripped higher, with the stock jumping 18% to US$297.72 after earnings, even though it had been under pressure over the past month. The spark was simple: chip equipment buyers are spending again and Lam reported record revenue of US$6.72b for the June quarter, capped by its highest gross margin in two decades at 52%. That is the headline today. The real question for you is whether this memory and foundry spending surge, paired with Lam’s rich 51.3x P/E, can sustain a multi year payoff rather than just a one day spike.

Love Lam Research’s record revenue and 52% gross margin but hesitant about paying a 51.3x P/E for one stock tied closely to memory and foundry cycles? Consider spreading that risk across our hand picked list of 56 AI infrastructure stocks.

FY 2026 Earnings Summary

• Revenue, Q4 FY 2026 vs. Q4 FY 2025: US$6,722.24m vs. US$5,171.39m (up about 30%)
• Net Income, Q4 FY 2026 vs. Q4 FY 2025: US$2,277.28m vs. US$1,720.09m (up about 32%)
• Basic EPS, Q4 FY 2026 vs. Q4 FY 2025: US$1.82 vs. US$1.35 (up about 35%)
• Gross Margin, Q4 FY 2026: 52% (this is the highest quarterly level in 20 years and is up from a trailing net margin of 29% a year earlier to 31.3% on a trailing basis)

Tired of scrolling through walls of earnings tables and raw figures trying to make sense of Lam Research? See a clear visual breakdown of the stock’s valuation in the interactive company report for Lam Research.

Lam Research’s AI Super Cycle Story Meets Hard Milestones

The bullish story around Lam Research is that AI driven chip complexity and new fabs can support a larger, longer spending cycle for its tools and services. The latest quarter hits several concrete milestones that point in that direction. Memory systems reached 46% of systems revenue with NAND roughly doubling quarter on quarter and DRAM steady, which ties directly to the thesis that higher memory content and high bandwidth formats matter for Lam’s etch and deposition gear.

On the services side, the case for a higher margin, more recurring mix is also getting real traction. Customer Support Business Group revenue nearly reached US$2.5b and grew faster than the core business, with upgrades the key driver. Gross margin at 52% and operating margin at 38.4% line up with management’s long term target for structurally higher profitability in what it describes as an AI equipment super cycle.

Compare Lam Research’s record gross margin, services traction and 18% post earnings price jump with how institutional analysts are framing the risk and reward. See the consensus price target analysis for Lam Research to gauge whether Wall Street expects this momentum to continue or cool.

Lam Research Bear Case: China, Cycles And Missed Proof Points

The bearish narrative around Lam Research centers on heavy China reliance, sensitivity to wafer fab cycles and the risk that high expectations outrun what the business can actually deliver. On China, this quarter moves the dial slightly in the bears’ favor. Revenue from China declined from 34% to 26% of systems revenue, with domestic Chinese customers weaker even as multinational fabs in the country held up. That is exactly the kind of export control and local competitor pressure bears worry about.

Cycle risk also is not fully cleared. Management lifted 2026 wafer fab equipment expectations to the low US$150b range and called out a multi year AI driven setup, but this still hinges on customers following through on aggressive capex plans after a very strong run. Foundry and logic systems revenue mix fell from 54% to 44% as mature node spending in China softened, which limits clean evidence that all technology inflections are progressing smoothly.

After an 18% one day jump and volatile recent trading, it is worth asking if execution or earnings quality risks are underestimated. Review the full risk analysis for Lam Research which shows 3 important warning signs

Stay Ahead With Simply Wall St

If Lam Research’s record revenue, 52% gross margin and sharp post earnings move have your attention, register for free with Simply Wall St and add it to a Watchlist to track its share price against fair value and watch for an entry point that suits your plan. When you decide to take a position, use the Portfolio Command Center to keep your holdings organised and get focused alerts on key developments instead of constant noise. For a broader view on what other investors are thinking about Lam Research and related opportunities, tap into the Community and compare perspectives. By identifying potential catalysts and risks early, you may be better equipped to act with confidence before the wider market responds.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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