Episode
Lam Research (LRCX): Record Quarter, Blowout Guide — So Why Are We Saying AVOID?
- Published
- Jul 29, 2026
- Duration seconds
- 897
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Summary
Lam Research Corporation (LRCX) Q4 FY2026 — Lam Research (LRCX), one of the four indispensable wafer-fab equipment makers alongside ASML, Applied Materials and KLA, reported fiscal Q4 2026 (quarter ended June 28, 2026) after the close on July 29: revenue $6.722B (+30.0% YoY, +15.1% QoQ), GAAP diluted EPS $1.81 and non-GAAP $1.82 (vs $1.68 consensus), GAAP gross margin 51.7% and operating margin 37.4% — records on essentially every line and above the high end of guidance. The real news was the guide: September-quarter revenue of $8.10B +/- $400M against a ~$7.09B consensus, with EPS of $2.15 vs $1.83 expected, gross margin 52.0% and operating margin 39.5% — above the top of Lam's own prior long-term model. FY2026: revenue $23.233B (+26.0%), net income $7.265B (+35.6%), diluted EPS $5.76. Under-covered: CSBG (installed-base spares/service on 100,000+ chambers) grew 42.6% YoY to $2.472B, FASTER than systems (+23.6%), and is now ~37% of revenue; China collapsed from 34% of revenue in March to 26% in June, with China dollars actually DOWN ~12% sequentially while total revenue rose 15% — every dollar of sequential growth came from outside China (Taiwan is now #1 at 27%); and FY26 free cash flow FELL 9.7% to $4.891B even as net income rose 36%, as receivables jumped 58% YoY and DSO stretched from 59 to 72 days, dropping cash conversion from 101% to 67%. Credit where due: Lam does NOT add back stock compensation — non-GAAP EPS $1.82 vs GAAP $1.81, a one-cent gap — and management cut buybacks to $247M in the June quarter (from $1.16B at ~$211/sh in March) while the stock made all-time highs above $430. Our normalized owner-earnings DCF on $9.3B of mid-cycle owner earnings (mid-cycle revenue $30B at a 37% operating margin, 9% discount, 3.75% terminal) lands fair value at $184 vs…