Lam Research Corporation (לאם ריסרץ')
Analytical review · Annual report for the fiscal year ended June 28, 2026
Bakshi Finance — Family Office | Research Depth: Comprehensive
What this review is based on. Lam Research's Form 10-K for the fiscal year ended June 28, 2026, filed August 7, 2026; the earnings release of July 29, 2026; the Form 10-Q for the quarter ended March 2026; eight prior quarterly earnings releases; and the proxy statement of September 2026. The company's fiscal year ends in late June. Market data: closing price on Oct 9, 2026, Bank of Israel official USD rate of the same day. The next quarterly report has not yet been published.
Company Profile
Lam Research designs and manufactures wafer fabrication equipment. Its core markets are etch (controlled removal of material from the wafer), deposition (laying down thin metal or insulating films) and wafer clean. Founded in 1980 and headquartered in Fremont, California, it employs about 23,300 people, more than a quarter of them in research and development.
Its customers are the world's largest chipmakers. The filing names four as its most significant customers: Micron, Samsung, SK hynix and TSMC. In fiscal 2026, four customers accounted for 55% of revenue. About 93% of revenue comes from outside the United States.
Revenue falls into two types: systems — new leading-edge equipment (64% of revenue), and customer support — spares, upgrades, services and non-leading-edge equipment from the Reliant line (36%). For accounting purposes the company has one reportable segment.
Financial Performance
The year: fast growth, and faster profit growth
In fiscal 2026 revenue rose 26.0% to $23.23 billion and net income rose 35.6% to $7.27 billion. According to the filing, growth came mainly from foundry customers, and gross margin rose from 48.7% to 50.5% "largely due to favorable customer mix", partially offset by aluminum and steel tariff costs. R&D expense rose 13.3% but fell from 11.4% to 10.2% of revenue.
What to normalize: the gap between reported and company-adjusted earnings is negligible (latest quarter: $2,277M vs. $2,280M). The material difference is tax: the prior year included one-time tax benefits, and the effective tax rate rose from 10.1% to 12.1%. Before tax, earnings rose 38.7%.
| $ millions | Q1 FY25 | Q2 FY25 | Q3 FY25 | Q4 FY25 | Q1 FY26 | Q2 FY26 | Q3 FY26 | Q4 FY26 |
|---|---|---|---|---|---|---|---|---|
| Revenue | 4,168 | 4,376 | 4,720 | 5,171 | 5,324 | 5,345 | 5,841 | 6,722 |
| Gross margin | 48.0% | 47.4% | 49.0% | 50.1% | 50.4% | 49.6% | 49.8% | 51.7% |
| Operating margin | 30.3% | 30.5% | 33.1% | 33.7% | 34.4% | 33.9% | 35.0% | 37.4% |
| Diluted EPS ($) | 0.86 | 0.92 | 1.03 | 1.35 | 1.24 | 1.26 | 1.45 | 1.81 |
Quarters by the company's fiscal year (Q1 = July–September). Per-share data adjusted for the 10-for-1 stock split of October 2024.
The multi-year context
Lam's revenue rises and falls with chipmakers' investment cycles. In fiscal 2024 revenue fell 14.5% and net income fell 15.1%. In the two years that followed, revenue rose 23.7% and 26.0%. Over five years, net margin rose from 26.7% to 31.3%.
| Fiscal year, $ billions | 2022 | 2023 | 2024 | 2025 | 2026 |
|---|---|---|---|---|---|
| Revenue | 17.23 | 17.43 | 14.91 | 18.44 | 23.23 |
| Net income | 4.61 | 4.51 | 3.83 | 5.36 | 7.27 |
| Net margin | 26.7% | 25.9% | 25.7% | 29.1% | 31.3% |
| Diluted EPS ($) | 3.28 | 3.32 | 2.90 | 4.15 | 5.76 |
| Free cash flow | 2.55 | 4.68 | 4.26 | 5.41 | 4.89 |
Earnings up, cash flow down
Operating cash flow fell 5.1% to $5.86 billion and free cash flow fell 9.7% to $4.89 billion — 67% of net income, versus 101%–111% in the three prior years. The gap comes entirely from working capital: accounts receivable rose $1.96 billion, and days sales outstanding rose from 59 to 64 in Q3 and to 72 at year-end. Before working-capital changes, cash flow was 107% of net income, as in the prior year. Deferred revenue declined over the year from $2.68 billion to $2.43 billion, mainly due to lower customer down payments according to the filing. In the latest quarter itself it rose from $2.22 billion to $2.43 billion.
Management guidance for the next quarter
According to management, for the quarter ending Sept 27, 2026 revenue will be $8.10 billion (plus or minus $0.40 billion), operating margin 39.5%, and EPS $2.15. That is 52% revenue growth over the year-ago quarter. In each of the last eight quarters actual revenue landed above the guidance midpoint, by 1.5% to 3.4%, and never above the top of the range.
Balance Sheet & Capital
On June 28, 2026 the company held $5.58 billion in cash and cash equivalents against $3.75 billion of notes at par — net cash of $1.83 billion, nearly unchanged from a year earlier ($1.89 billion). A $750 million note series was repaid from cash in March 2026. The next maturity is in 2029 ($1.0 billion). A $2 billion commercial paper program was unused. Stockholders' equity rose to $12.47 billion, the current ratio was 2.6, and operating income covered interest expense 52 times.
Capital return: in fiscal 2026 the company repurchased $3.85 billion of stock and paid $1.27 billion in dividends — together 105% of free cash flow. The average repurchase price rose each quarter: $105.67, $153.62, $210.57 and about $325. In the latest quarter repurchases fell to $247 million, from $1.16 billion in Q3. Diluted share count fell 2.2% over the year. $4.04 billion of authorization remains. The quarterly dividend during the fiscal year was $0.26 per share.
Inventory: $4.28 billion, unchanged from a year earlier even though revenue rose 26%. It includes shipments to customers in Japan awaiting acceptance, with estimated future revenue of about $490 million. Capital expenditures rose 27% to $966 million, according to the filing mainly for U.S. labs and manufacturing expansion.
Segments
The company has one reportable segment and publishes three breakdowns: by region (location of the customer's fab), by revenue type, and by end market.
| $ millions | FY25 | FY26 | Change | FY26 share |
|---|---|---|---|---|
| China | 6,205 | 7,860 | +26.7% | 34% |
| Taiwan | 3,445 | 5,223 | +51.6% | 22% |
| Korea | 4,128 | 4,505 | +9.1% | 19% |
| Japan | 1,881 | 2,171 | +15.4% | 9% |
| United States | 1,377 | 1,529 | +11.0% | 7% |
| Southeast Asia | 837 | 1,246 | +48.8% | 6% |
| Europe | 563 | 699 | +24.2% | 3% |
China in the latest quarter: $1.72 billion, 26% of revenue — down 13.8% from Q3 and 6.2% from the year-ago quarter, while total revenue rose 15.1% and 30.0%. In fiscal 2024 China was 42% of revenue. Taiwan was 27% of revenue in the latest quarter, and Korea 20%. (Quarterly regional figures were derived as annual minus nine months, and match the percentages in the earnings release.)
By type: systems $14.89 billion (+29.5%), "primarily due to foundry equipment customer spending". Customer support $8.35 billion (+20.2%), according to the filing "mainly due to revenue from spares and non-leading-edge equipment"; in the latest quarter +42.6%. By end market (equipment and upgrades): foundry 54% (45% a year earlier), memory 39% (42%), logic and integrated device manufacturers 7% (13%).
Competitive Position
The differentiation the company describes in its filing rests on three things: research and development ($2.38 billion a year), a broad installed base that it learns from, and qualification at the customer. According to the filing, once a chipmaker has qualified a supplier's tool for a specific production step, it generally keeps that supplier for that step and technology node. The industry's shift to three-dimensional structures in memory and logic, to advanced packaging and to HBM memory increases, according to the company, the number of etch and deposition steps per chip.
Competitors, per the filing: in deposition — Applied Materials, and in some areas ASM International and Wonik IPS. In etch — Applied Materials, Hitachi and Tokyo Electron. In clean — Screen, Semes and Tokyo Electron.
Where the filing points to pressure: U.S. export controls on China apply to Lam but not to competitors outside the U.S. According to the filing, initiatives to promote domestic manufacturing in China could increase competition from local equipment and spare-parts makers. The filing contains no market-share data, and this review includes no primary-source competitor data.
How to Think About This Company
With Lam, the central question is not the quality of the business but which level of earnings represents it. A 37% operating margin, a return on equity of about 65% and a net-cash balance sheet describe a strong business. But Lam's earnings derive from the capital budgets of very few customers, and those budgets move in cycles. Measuring the company on the current year and measuring it over a full cycle produce two different pictures of the same business.
The cycle is part of the business model. In fiscal 2024 revenue fell 14.5%. In the two years that followed it rose about 56% cumulatively, and per management guidance the next quarter will be 52% above the year-ago quarter. Average diluted EPS over fiscal 2022–2026 was $3.88, versus $5.76 in the latest year.
Four customers, four investment decisions. 55% of revenue came from four customers, and five customers hold 72% of receivables. In the prior year only two customers crossed the 10%-of-revenue mark. As concentration rises, the company's results depend more on each of their capital plans.
China: a shrinking share, and an open question. China fell from 42% of revenue in 2024 to 34% in 2026, and to 26% in the latest quarter, when revenue from China also fell in dollars. The filing describes expanded licensing requirements and restricted-entity lists, and states there is no assurance licenses will be issued. It does not explain the latest quarter's decline, and does not separate domestic Chinese customers from foreign-owned fabs in China.
Margins rise with volume. Over eight quarters gross margin rose from 48.0% to 51.7%, and operating margin from 30.3% to 37.4%. Per the guidance, each additional dollar of revenue next quarter would translate into about half a dollar of operating income. The same mechanism works in reverse: when revenue falls, earnings fall faster.
Earnings versus cash. Net income rose 36%, but free cash flow fell 10%. The difference is collections: days sales outstanding rose from 59 to 72, and customer down payments declined during the year. Before working-capital changes, cash flow matches earnings. The question is whether this is year-end timing or a change in payment terms with the largest customers.
Management is building capacity. Headcount rose from about 20,600 in March 2026 to about 23,300 in August 2026, and capital expenditures rose 27%. The filing states that the company exercises discretion over the timing and prioritization of manufacturing and deliveries, and that this affected the timing of revenue recognition this year. In other words, part of the consistency of its guidance record also rests on the company's timing decisions.
The historical multiple versus today's. Lam's P/E at fiscal year-ends 2022–2025 ranged from 13.6 to 36.4; the highest was in 2024, the earnings trough. On Oct 9, 2026 it stood at about 55 on trailing twelve-month earnings, and about 82 on five-year average earnings. Free cash flow yield on market capitalization was 1.2%. In the twelve months ended June 2026 the stock's total return was 3.9 times, and market capitalization has since declined about 16%. These figures describe the starting point; they do not determine the direction.
High capital return, modest effect. The company returned 105% of free cash flow to shareholders, yet share count fell only 2.2%, because the average repurchase price tripled during the year. In the latest quarter, when the price was highest, repurchase volume was the lowest of the year.
This framework is intended to structure analysis, not to produce an investment conclusion. It does not decide and does not take part in the decision — the decision belongs to the reader.
Risks & Monitoring
Risks that emerge from the filings
- Cyclicality: revenue depends on chipmakers' investment. In fiscal 2024 revenue fell 14.5%.
- China and export controls: 34% of annual revenue. According to the filing, U.S. licensing requirements have limited the market and could materially harm revenue; foreign competitors are not subject to them.
- Customer concentration: four customers 55% of revenue; five customers 72% of receivables.
- Tariffs and supply chain: aluminum and steel tariffs weighed on gross margin (not quantified in the filing). Some components come from a single supplier; the filing also mentions rare earth elements.
- Environmental regulation: proposed PFAS restrictions could require product changes.
- Tax: a 12.1% effective tax rate that relies on non-U.S. income; legislative changes could raise it.
Items to monitor in the Q1 fiscal 2027 report
| # | Item | Latest reading |
|---|---|---|
| 1 | Revenue vs. management guidance | Guidance: $7.70–8.50 billion |
| 2 | Gross margin | 51.7%; guidance: 51%–53% |
| 3 | China — percent and dollars | 26% · $1.72 billion |
| 4 | DSO and deferred revenue | 72 days · $2.43 billion |
| 5 | Operating cash flow vs. net income | 64% in the latest quarter |
| 6 | Repurchase volume | $247 million in the quarter |
| 7 | Foundry and memory mix | 54% / 39% for the year |
| 8 | Headcount and capital expenditures | ~23,300 · $966 million for the year |
Scenario Framework
The scenarios below are descriptive, not predictive. They contain no prices, no probabilities and no ranking of outcomes. Their only purpose is to organize the conditions that would need to hold for each state to materialize, so they can be checked against future filings.
Scenarios are descriptive, not predictive.
- If revenue meets management guidance in the quarters after the next one as well
- If operating margin stays above 37% even as growth moderates
- If DSO returns to 60 days or below, and cash flow again matches earnings
- If the decline in China is offset in other regions without further concentration
- If revenue stabilizes around the guided level, without further acceleration
- If margins move within the range of the last eight quarters
- If China's weight stays within 25%–35%
- If capital return stays close to free cash flow
- If one of the large customers defers investment plans, and guidance points to a sequential decline
- If export controls on China are expanded and revenue from China keeps falling in dollars
- If DSO keeps rising and down payments keep falling
- If headcount costs and capital expenditures keep growing faster than revenue
Analytical Lens
The following six questions are identical in every company review we publish. They are deliberately open and do not lead to a single conclusion. Their role is to let the reader examine the company along the same six dimensions as any other company.
Key Observations
1. For the fiscal year ended June 28, 2026, Lam Research reported revenue of $23.23 billion (+26.0%) and diluted EPS of $5.76 (+38.8%). In the latest quarter operating margin was 37.4%, versus 33.7% a year earlier.
2. Free cash flow fell 9.7% to $4.89 billion, 67% of net income. Accounts receivable rose $1.96 billion, and days sales outstanding rose from 59 to 72.
3. China was 34% of revenue for the year and 26% in the latest quarter, when revenue from China fell 13.8% from the prior quarter. Four customers accounted for 55% of annual revenue.
4. Per management guidance, revenue for the quarter ending Sept 27, 2026 will be $8.10 billion, plus or minus $0.40 billion. Headcount rose to about 23,300, from about 20,600 in March 2026.
Bakshi Finance operates as a Family Office for qualified clients only. Mr. Yaron Bakshi held an investment advisory license from 2008 to 2023. As of the publication date of this document, the company does not hold an investment advisory, investment marketing, or portfolio management license.
This document is intended for research and professional education purposes only. Nothing herein constitutes a recommendation to buy, sell, hold, or take any action in securities. It is not a substitute for advice that takes into account each person's individual data and needs. Any decision is the sole responsibility of the investor.
Past performance is not indicative of future results. Data was drawn from official sources: the Form 10-K for the fiscal year ended June 28, 2026 (August 7, 2026), the Form 10-Q for the quarter ended March 29, 2026, the quarterly earnings releases from July 2024 to July 2026, and the company's Form 8-K filings and proxy statement with the U.S. Securities and Exchange Commission. Multiples and market data: stockanalysis.com. Filing updates published after this date are not included.
Qualified-Client Review — Family Office
The full analytical review of Lam Research (LRCX) for the fiscal year ended June 2026 is available to Bakshi Finance premium clients.
The review includes a 10-section analysis, "How to Think About This Company", a structured scenario framework, and a 6-dimension Analytical Lens.
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