Lam Research Stock: Why did LRCX shares fall despite record profits?
Lam Research posts record revenue as AI demand surges
Lam Research reported record revenue of $8.22 billion for the September 2026 quarter, up 54% year-on-year and 22% sequentially. Strong investment in AI infrastructure and advanced chip manufacturing helped the semiconductor equipment maker deliver its fifth consecutive quarter of record sales. (Sources: BigGo Finance, Stocktwits)
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Profit margins hit new highs
The company’s adjusted gross margin rose to 52.4%, while adjusted operating margin reached 40.2%, crossing the 40% mark for the first time. Adjusted earnings per share came in at $2.20, ahead of market expectations of $2.18.
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Memory chip demand drives growth
Memory systems revenue surged 120% from a year earlier, supported by investments in high-bandwidth memory (HBM), DRAM and NAND technologies. NAND revenue increased around 40% sequentially as chipmakers invested in higher-layer storage technologies.
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Supply constraints limit sales outlook
Lam Research forecast December-quarter revenue of $8.6 billion, plus or minus $400 million. However, supply-chain bottlenecks are delaying some shipments into the March quarter, preventing the company from fully capitalising on strong demand.
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China’s contribution expected to decline
China accounted for 35% of Lam Research’s September-quarter revenue, up from 26% in June. The company expects its contribution to fall substantially in the December quarter, primarily because of weaker spending by domestic Chinese customers. Multinational customers operating in China are expected to remain relatively resilient.
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AI investment supports long-term growth
Lam Research expects global wafer fabrication equipment spending to exceed $200 billion in 2027, compared with the mid-$150 billion range projected for 2026. The company sees demand extending through 2028 as chipmakers expand capacity for AI, memory and advanced computing.
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Why did LRCX shares fall despite record results?
Despite beating earnings expectations, Lam Research shares fell sharply in after-hours trading as investors weighed supply constraints, a weaker China outlook and elevated expectations following a strong rally in the stock. The reaction highlights how operational bottlenecks and future growth concerns can outweigh strong quarterly earnings.