Lam Research (LRCX): FQ426 recap - Pretty darn good!

Research evidence excerpt

Lam Research (LRCX): FQ426 recap - Pretty darn good!

into the high-30% range with

the company likely already towards the high-end of the range at ~36% or so.

• Management also further took up Lam’s CY26 advanced packaging revenue expectations which are now seen growing

>70% YoY this year, and views future growth drivers as very favorable, with successive generations of advanced packaging

requiring more redistribution layers, denser copper interconnects, taller structures, and increasingly complex power delivery

networks.

• China WFE spending is still expected be flattish YoY in CY26, with Lam noting that spending from multinationals was up QoQ

while domestic Chinese customers’ spending was down, a trend that management expects to continue through the year.

• Lastly, the company provided an updated framework to their long-term profitability model they introduced during their last

investor day, with Lam now targeting gross and operating margins in the mid-50s and mid-40s range over time, respectively,

vs prior 50%+/35%+ offered up at the analyst day in February 2025 (those prior targets have been hit years early).

What is there to say? This was about as good of a print from the company as we have ever seen, and things appear to

be only getting better from here. As strong as this year is it remains cleanroom-constrained, limits that should begin

to free up into 2027/28 allowing Lam to further benefit as spending levels move higher, with favorable exposure to

key inflections (GAA, packaging, HBM, NAND upgrades and greenfield builds etc) and growing success at capturing

more value from them (pricing actions etc). It should be said that the company is executing exceedingly well, with