Wolfe Research Reiterates Peerperform Rating on Lam Research

Wolfe Research analyst Chris Caso reiterated a Peerperform rating on Lam Research (NASDAQ: LRCX).

“LRCX reported DecQ slightly ahead of expectations, but guided MarQ revenue to $5.7bn (+7% q/q, +21% y/y) at the midpoint, 7% above Street’s $5.2bn forecast.

Of note, the company forecasted CY26 WFE to be $135bn (up 23% y/y), well ahead of street expectations (we had forecasted 13% y/y WFE growth for CY26).

The qualitative factors behind that growth – memory and advanced logic – are not a surprise.

But the magnitude is surprising, and stronger than the growth suggested by ASML earlier in the day.

One swing factor has been China, which had been an investor concern considering LRCX’s 24% y/y China growth in CY25. China was 35% of revenue in DecQ.

Nonetheless, LRCX expects China revenue to be flat in CY26, also better than most had expected, and suggests that management isn’t concerned about a decline in absolute dollars from these levels.

Further, the company expects to continue to gain share of WFE, suggesting they expect to grow systems revenue in excess of 23% y/y.

Our revised CY26 estimate reflects 27% y/y growth in systems revenue, with strong growth at TSMC and memory suppliers, with 21% y/y growth in CY27. That results in $7.15 earnings power for CY27.

We think reports from others will shine further light on CY26 WFE trends, but business conditions are clearly strong, and management’s conviction with respect to China stability is encouraging, given LRCX’s high exposure.

The multiple nonetheless gives us pause, now at 33x our revised CY27 EPS.”

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