Reports: Wednesday, July 29, 2026 (after market close)
This is arguably one of the more emotionally charged prints of the earnings season. LRCX has been one of the top AI-capex beneficiaries of the cycle, but the stock has round-tripped violently into the print — falling from an all-time high near $433 (June 30) to $269.65 at Tuesday's close (July 28), a roughly 38% drawdown in one month, dragged down alongside the broader semicap complex (AMAT, KLAC, ASML) on fears of AI-spending exhaustion and a scare over Chinese progress in domestic lithography tools. KLA's July 28 report — a beat-and-raise that still saw shares fall over 7% after-hours — is a reminder that the bar for "good enough" has become very high in this tape.
Coming out of the record March 2026 quarter, management guided the June quarter (this print) to:
For the quarter ending June 28, 2026, Lam guided revenue of $6.60 billion +/- $400 million, gross margin of 50.5% +/- 1%, operating margin of 36.5% +/- 1%, and non-GAAP EPS of $1.65 +/- $0.15 on a diluted share count of roughly 1.255 billion shares. CFO Doug Bettinger also told investors on the call to expect gross margin to "kind of level out at where it's at, I think, for the rest of the year", i.e., ~50.5%.
March quarter (last reported) recap: Revenue was $5.84 billion, U.S. GAAP gross margin was 49.8%, operating margin was 35.0%, and diluted EPS was $1.45; non-GAAP gross margin was 49.9%, operating margin was 35.0%, and non-GAAP diluted EPS was $1.47 — a third consecutive record revenue quarter, with results above the midpoint of guidance ranges, while earnings per share actually exceeded the high end of the range.
Consensus has moved up meaningfully and now sits above the company's own guidance midpoint — a setup that raises the bar for a "clean beat":
a) WFE 2026 outlook — is $140B+ holding or moving higher again? Last quarter, management raised its 2026 WFE view mid-cycle: in January the company shared an outlook for 2026 WFE in the $135 billion range, but since then spending projections from customers have moved higher across all device segments, and Lam now expects WFE of $140 billion with a bias to the upside, setting up what CEO Tim Archer called "another year of compelling WFE growth in 2027." Watch for another upward revision given peer commentary (ASML's guidance raise, Morgan Stanley's $149B estimate) — but also watch for any signs of digestion given the sharp equity-market repricing of AI capex durability.
b) NAND upgrade cycle — the biggest swing factor Lam flagged an acceleration in NAND conversion spending: roughly $40 billion in conversion spending would be required over several years to enable existing NAND capacity to produce devices with more than 200 layers, and management now anticipates this conversion will be pulled forward with the majority of spending occurring before the end of calendar 2027, compounded by installed wafer capacity expected to decline more than 20% from prior highs by the end of this year, which should drive greenfield NAND capex as well. Investors will want confirmation this is showing up in bookings/revenue mix, not just rhetoric.
c) DRAM/HBM strength and the 1c-node transition The industry is shifting from silicon nitride-based dielectric films to advanced ALD silicon carbide low-k layers for bitline capacitance reduction as it moves to 1c-generation devices, with Lam's Striker carbide solutions positioned as tools of record at all leading memory makers for bitline spacer applications. Memory mix has been rising sharply — memory was 39% of systems revenue in March, up from 34% in December, with DRAM alone at a record 27% of systems revenue. A further increase in memory mix (especially DRAM/HBM) is a bullish read-through to Lam's differentiated etch/deposition content.
d) China — moderating as a % of revenue, structurally China revenue was 34% of total in the March quarter, and management explicitly guided that China revenue in the June quarter would decline from these levels, with Bettinger noting China WFE in 2026 is roughly flattish to up a little year-over-year, but China as a percent of Lam's overall revenue is coming down as global multinational customers grow faster. Watch this print for confirmation of the further step-down, and for any commentary on the recent headlines around Chinese progress in domestic DUV lithography (which primarily pressured ASML, but raises longer-term questions about China's equipment self-sufficiency and the durability of the China revenue base for the whole group).
e) Gross margin durability at/above the long-term model March-quarter margin strength was framed as structural, not cyclical: management attributed it to a multi-year factory-footprint build-out closer to customers and continued efforts to be paid for value delivered, plus improved tool reliability that reduces installation and warranty spending, which flows through to gross margin. CFO Bettinger said the team is already above its prior long-term operating-margin target and acknowledged they need to give investors "an updated framework" later in the year — this print or the associated call would be a logical venue for at least directional comments, if not a formal update.
f) Customer Support Business Group (CSBG) — durability of the growth rate CSBG just crossed $2 billion in quarterly revenue for the first time, but management guided this segment to plateau near current levels given utilization already near full: utilization in the March quarter was very, very high, and management doesn't know that utilization can get any higher, suggesting spares/service components of CSBG are probably plus or minus where they are over the next couple of quarters, with incremental upside coming from new products like Dextro cobots and Equipment Intelligence.
g) Capital returns and buyback pace Lam returned 139% of free cash flow in the March quarter via ~$800 million of buybacks, dividends of $326 million, and retirement of $750 million in maturing notes, against a policy of returning at least 85% of FCF over time. Watch for buyback commentary given the stock's sharp pullback — a larger repurchase quarter would be a signal of management's own view on valuation.
After the ~38% pullback from its late-June peak, LRCX now trades well below where it sat when sell-side targets were being raised (Morgan Stanley's $331 PT, set with the stock in the high-$200s, implied ~24.5% upside at the time). The setup into tomorrow's print is unusual: fundamentals (WFE estimates, NAND/DRAM upgrade cycles, gross margin) have generally been revised up by both the company and sell-side analysts over the past quarter, while the stock price has moved sharply down on macro/sentiment-driven, sector-wide AI-capex jitters rather than anything company-specific. That divergence — bullish fundamentals vs. bearish tape — is likely to be the central tension investors are watching to see resolved in Wednesday's report and, more importantly, in management's forward commentary on the call.