Lam Research (LRCX) Stock Price Slides Despite Record Q1 Earnings

Lam Research just reported its Q1 2027 results with record revenue of US$8.22b and basic earnings per share of US$2.20. The stock still dropped about 12% today to roughly US$230. That clash between a sharp price fall and headline record profitability is the story.

The market is treating today as an earnings hangover. Yet gross margin hit 52.4% and operating margin reached 40.2%, both fresh highs for a capital equipment player. Short term emotion is punishing the share price while the core profit engine looks stronger. This sets up a clear sentiment versus fundamentals test for Lam Research.

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Q1 2027 Earnings Summary

• Revenue (Q1 2027 vs. Q1 2026): US$8,219.4m vs. US$5,324.2m (up roughly 54%)
• Net Income, excl. extra items (Q1 2027 vs. Q1 2026): US$2,753.1m vs. US$1,568.7m (up about 75%)
• Basic EPS (Q1 2027 vs. Q1 2026): US$2.20 vs. US$1.24 (up around 77%)
• Gross Margin and Operating Margin (Q1 2027): Gross margin: 52.4%; operating margin: 40.2% (both at record levels for Lam Research)

Ask Charlie what Lam Research said about AI driving demand.

Evaluating Lam Research’s Margin‑Focused Bull Case

Bulls argue Lam Research can turn NAND conversions and services into structurally richer profitability.

"The main thing that has to go right is that Lam Research continues to capture a meaningful portion of NAND conversions, advanced packaging demand, and higher margin Customer Support Business Group revenue while managing export controls and a higher ongoing tax rate."

Q1 results land squarely on that roadmap. Memory systems revenue, including NAND, reached a record dollar level. Advanced packaging tools contributed to record foundry and logic systems revenue. CSBG revenue is running near US$2.5b per quarter with growth above 30% year on year, supporting record 52.4% gross and 40.2% operating margins despite a tax rate near 16%.

The price and this Narrative do not agree. → Uncover what this Narrative says Lam Research is actually worth.

Lam Research Bear Fears Meet Mixed Evidence

Bearish voices argue Lam Research’s biggest hurdle is not demand but how much of that demand ends up as lasting earnings.

"Even if higher etch and deposition intensity supports strong gross margins, the step up in Lam Research's non GAAP tax rate into the mid teens and its expected persistence over time may absorb a larger share of operating profit."

Q1 prints a roughly 40% operating margin and a tax rate near 16%. That is exactly the higher drag skeptics worried about, yet net income and EPS both hit records. The immediate milestone miss is not conversion. It is guidance that only slightly tops consensus while the share price has already fallen almost 12% today, which tightens the room for any earnings wobble.

Hunt Earnings Disconnects Before Consensus

Lam Research just showed how a record quarter can still coincide with a sharp price drop. The real opportunity could be spotting stocks where fundamentals and sentiment have not yet realigned.

• Company 1 - 41% below our estimate - expand device trade in and recommerce volumes as policy backed subsidies and greener consumption shift more users into formal recycling channels.
• Company 2 - 30% below our estimate - grow as coconut based drinks move from niche shelves into mainstream retailers that now add both branded and private label offerings.
• Company 3 - 24% below our estimate - meter AI usage across productivity and cloud tools as customers shift more workflows onto the same software and infrastructure stack.

Three companies from the same screener. Open all 31 potentially undervalued companies →

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