Lam Research reported results on Wednesday, October 21, after the close, for the quarter ended September 27, 2026 - the first fiscal quarter of its 2027 year. Revenue: $8.22 billion, up 54.4% versus the year-ago quarter and 22% from the previous quarter. Operating margin reached 40.0%, and the company reports records in revenue, profit and earnings per share.
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What was reported
| September 2026 | June 2026 | September 2025 | Year-over-year change | |
|---|---|---|---|---|
| Revenue (millions of dollars) | 8,219.4 | 6,722.2 | 5,324.2 | +54.4% |
| Cost of goods sold | 3,920.6 | 3,243.5 | 2,639.3 | +48.5% |
| Gross margin | 4,298.9 | 3,478.7 | 2,684.9 | +60.1% |
| Gross margin percentage | 52.3% | 51.7% | 50.4% | +1.9 pts |
| Research and development | 666.4 | 642.9 | 576.4 | +15.6% |
| Selling, general and administrative | 348.7 | 322.3 | 279.3 | +24.8% |
| Operating income | 3,283.7 | 2,513.5 | 1,829.1 | +79.5% |
| Operating margin | 40.0% | 37.4% | 34.4% | +5.6 pts |
| Net income | 2,753.1 | 2,277.3 | 1,568.7 | +75.5% |
| Diluted earnings per share (dollars) | 2.19 | 1.81 | 1.24 | +76.6% |
Source: Lam Research's press release for the quarter ended September 27, 2026, October 21, 2026, filed with the SEC on Form 8-K as Exhibit 99.1. The year-ago margins and the year-over-year changes are calculated from the income statement in the release; the release itself compares only to the previous quarter.
On the non-GAAP measure: gross margin of 52.4%, operating margin of 40.2% and diluted earnings per share of $2.20. The gap between GAAP and non-GAAP is one cent per share - meaning the adjustments here are negligible, which is not a given in this sector.
Systems versus support
The release separates two kinds of revenue, and the separation explains the quarter:
- Systems - $5.73 billion, up 61.6% year over year. These are sales of new equipment in deposition, etch and clean.
- Customer support and other - $2.49 billion, up 40.0%. This is service, spares, upgrades and non-leading-edge equipment from the Reliant product line.
So the faster growth is in new equipment, not in service. That is what produces the leverage: gross margin rose 60.1% while cost of goods sold rose 48.5%, and operating expenses rose just 18.6%.
Geographic distribution
| Region | Share of revenue |
|---|---|
| China | 35% |
| Korea | 20% |
| Taiwan | 18% |
| Japan | 9% |
| United States | 8% |
| Southeast Asia | 6% |
| Europe | 4% |
China is the company's largest market, more than a third of revenue. The top three markets - China, Korea and Taiwan - are together 73% of revenue. The United States, where the company is listed, is 8%.
The balance sheet
Cash, cash equivalents and restricted cash rose to $7.45 billion, from $5.60 billion at the end of the previous quarter. The company attributes the increase to cash generated from operating activities, partly offset by capital return activities and capital expenditures.
Deferred revenue rose to $2.66 billion, from $2.43 billion. The release adds a note worth knowing: the balance excludes shipments to customers in Japan, where control does not transfer until customer acceptance, and which are classified as inventory at cost until then. The estimated future revenue from those shipments: about $468 million, versus about $490 million in the previous quarter.
Guidance
For the quarter ending December 27, 2026 the company guides:
| Guidance | Range | |
|---|---|---|
| Revenue | $8.60 billion | $400 million |
| Gross margin | 52.5% | 1 point |
| Operating margin | 40.5% | 1 point |
| Diluted earnings per share | $2.33 | $0.15 |
| Diluted share count | 1.253 billion |
The midpoint of the revenue range is 4.6% above the quarter just reported, and the guided operating margin, 40.5%, is above 40.0%. So the guidance assumes continued improvement, but at a far slower pace than the 22% sequential growth actually posted.
Chief executive Tim Archer attributes the results to AI driving higher semiconductor demand and greater device complexity, and notes the company's aim to outgrow the wafer fabrication equipment market.
The stock
The report was published after the close on Wednesday. The last close before the report: $260.81 on Wednesday, October 21, down 1.00% from the prior close of $263.45. The trading reaction to the report falls in the after-hours session and in Thursday's session, October 22. I was not able to verify that day's close at the time of writing, so I am not reporting it - the data provider reached its daily request limit. A figure that has not been verified does not get written, and I will update it when I have it.
Lam was among the stocks mentioned in the memory-sector selloff in early October, which we covered separately.
הזווית שלי
דעה אישית של אילן אברמוב - לא ייעוץ ולא המלצה
This report is strong on every line that can be measured, and still there are two things in it I would want to follow.
What is strong: revenue +54.4%, operating income +79.5%, and a 40% operating margin in a cyclical industry. Operating expenses rose just 18.6% - so the growth was not bought with spending. And one small detail that tells you something: the gap between GAAP and non-GAAP is one cent. In a sector where adjustments sometimes replace the picture, that is a clean number.
What is worth following, first: the concentration in China. 35% of revenue comes from one market, and three markets are 73%. That is not a new finding among equipment makers, but it means the company's top line depends on regulatory and commercial decisions that are neither its own nor its customers'.
Second, the gap between the actual pace and the guided pace. Revenue rose 22% from the previous quarter; the guidance for the next quarter assumes 4.6%. That may be ordinary conservatism, and it may be a sign that this quarter's step up - in which systems revenue rose 61.6% - is tied to the timing of deliveries and not only to sustained demand.
And what connects the two: the growth sits on new equipment, not on service. Systems revenue rose 61.6% and support 40.0%. New equipment is orders; service is an installed base. When growth comes from the former, it comes from the more cyclical of the two.
What I will follow: the ratio between systems and support revenue in the coming quarters, and China's share.
(To be clear: this is my personal opinion only. Nothing here is a recommendation to take any action, and there is no forecast here of the price of any security.)
Ilan Abramov, the author, or anyone on his behalf may hold some of the securities or funds mentioned in this article.
