TenQ

The Lam Research story

Lam Research makes chipmaking equipment, and its central question is whether increasingly complex memory and logic chips can sustain demand for its etch, deposition, and support businesses.

Written from Lam Research's own filings with the SEC, and rewritten when it publishes a new earnings release. Updated 2026-09-30.

  • $314.47share price, last close
  • $393.5Bmarket value
  • 24/36TenQ Score checks passed
  • 28.2%growth a year the price assumes

The story in brief

  • Complexity drives demand. The shift toward more complex chip structures increases the need for Lam’s precise material deposition, etching, and advanced packaging technologies.
  • Records precede another step. After record revenue of $6.72 billion and operating margin of 37.4% in the quarter to June 2026, Lam guided to further increases for September 2026.
  • Expectations exceed the record. The reverse DCF implies free cash flow after stock pay growing 28.2% a year for ten years, above Lam’s historical 21.3% annual pace.

What drives the business

  • Lam supplies equipment and services to memory manufacturers, foundries, and integrated chipmakers, with Micron Technology, Samsung Electronics, SK hynix, and Taiwan Semiconductor Manufacturing Company among its most significant customers.
  • The transition toward three-dimensional chip structures, new materials, and more demanding patterning increases manufacturing complexity and the precision required from Lam’s deposition, etch, and cleaning equipment.
  • Products such as ALTUS for metal deposition, Akara for conductor etching, and Vantex for advanced memory etching address these transitions, while Lam’s packaging equipment supports high bandwidth memory stacking.
  • Its Customer Support Business Group serves the installed equipment base through service, spare parts, upgrades, and new and refurbished Reliant equipment, extending customer relationships beyond initial equipment purchases.
  • AI-related semiconductor demand helped drive record revenue of $6.72 billion in the quarter to June 2026, while revenue over the last twelve months reached $23.2 billion, growing 26.0% against a three-year annual pace of 10.1%.

What the price assumes

At $314.47, the reverse DCF implies free cash flow after stock pay growing 28.2% a year for ten years using a 10.2% discount rate.

Lam delivered 21.3% annual growth on that measure over the last 10 years, while the TenQ check sets a 12.7% bar by slowing that record halfway toward 4%.

Lam passes 0 of 6 TenQ Value checks, with a free cash flow yield of 1.2% versus 5.4% in its own history.

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What could change the story

  • Rapid shifts in AI adoption and customer capital spending could leave Lam either unable to meet demand or carrying excess fixed costs after expanding operations.
  • Customers could adopt AI-based process development tools that reduce their reliance on Lam, narrowing its addressable markets or weakening its competitive position.
  • Competitors gaining control of suppliers of key intellectual property, technology, or components could restrict Lam’s access to critical inputs.
  • China accounted for 26% of revenue in the quarter to June 2026, leaving a substantial business exposed to export restrictions and other trade barriers.
  • Capital returns represented 105.4% of free cash flow in the TenQ check, exceeding internally generated cash despite cash and short-term investments of $5.6 billion against total debt of $3.7 billion.

What to watch next

  • For the quarter ending September 27, 2026, Lam expects revenue of $8.10 billion plus or minus $400 million and operating margin of 39.5% plus or minus 1%, setting the next test of delivery capacity and profitability.
  • Deferred revenue of $2.43 billion at June 2026 and approximately $490.2 million of estimated future revenue from Japan shipments awaiting customer acceptance are measures to follow as equipment becomes recognized revenue.
  • Free cash flow of $4.9 billion and stock-based pay of $386 million over the last twelve months provide the starting point for tracking cash generation after stock pay alongside capital returns.

Sources

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