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For fourth-quarter fiscal 2024, the company expects revenues of $3.8 billion (+/- $300 million). The Zacks Consensus Estimate for the same is pegged at $3.81 billion, indicating 18.9% growth from the figure reported in the year-ago quarter.
Management expects non-GAAP earnings of $7.50 (+/- 75 cents) per share. The consensus mark for earnings is pegged at $7.52 per share, indicating growth of 25.8% from the figure reported in the year-ago quarter. The earnings figure has been unchanged over the past 30 days.
Image Source: Zacks Investment Research
Lam Research has an impressive earnings surprise history. In the last reported quarter, the company delivered an earnings surprise of 7.3%. The company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 11.39%.
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Lam Research this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Lam Research has been benefiting from the solid rebound in the semiconductor industry.
Improving memory spending on the back of the growing proliferation of AI and machine learning, as well as Generative AI, is expected to have benefited the company in the fiscal fourth quarter. Increasing demand for advanced AI-centric chips is expected to have been a positive.
Increasing DRAM spending, driven by high bandwidth memory-related demand, is expected to have benefited Lam Research in the quarter under review.
Technology upgrades are anticipated to have boosted NAND spending. This, in turn, is expected to have been a plus.
Solid momentum in 3D DRAM and advanced packaging are anticipated to have been a tailwind for the company.
LRCX’s strong investments in expanding semiconductor fabrication capabilities, and research and development activities, along with strength in Semiverse solutions, are expected to have aided its quarterly performance.
With Semiverse simulation tools, the company has accelerated innovation in NAND high aspect ratio memory hole etch production. This is expected to have been a plus.
Meanwhile, its leading-edge investments are expected to have benefited the foundry/logic category.
Growing etch and deposition intensity, owing to increasing technology inflections in 3D architectures, is likely to have been another positive.
Lam Research is expected to have gained solid customer momentum on the back of its robust tools, which enable foundry logic inflections.
The growing proliferation of 5G and the Internet of Things is likely to have continued bolstering the adoption rate of the company’s advanced semiconductor and memory solutions in the fiscal fourth quarter.
All these factors are expected to have aided growth in the system revenues in the quarter under review.
The Zacks Consensus Estimate for fiscal fourth-quarter system revenues is pegged at $2.38 billion, indicating growth of 39.4% from the year-ago quarter’s actual.
Price Performance & Valuation
Lam Research’s shares have appreciated 14.2% on a year-to-date basis, underperforming the industry, the Zacks Computer & Technology sector and the S&P 500 index’s rise of 19.6%, 18.2% and 14.5%, respectively.
LRCX has also underperformed its peers Applied Materials (AMAT - Free Report) and KLA Corporation (KLAC - Free Report) , which have returned 27.4% and 35.4% year to date.
Year-to-Date Price Performance
Image Source: Zacks Investment Research
Now, let us look at the value Lam Research offers investors at current levels.
Currently, LRCX is trading at a discount, with a forward 12-month P/E of 24.88X compared with the industry’s 27.85X and lower than the median of 26.13X, reflecting a good opportunity for investors.
Image Source: Zacks Investment Research
Investment Thesis
Lam Research’s strong position in the semiconductor industry, which is on its recovery path this year, presents a compelling investment opportunity. The company’s strength in deposition and etch, core competencies in areas such as nanoscale applications enablement, chemistry, plasma and fluidics, and advanced systems engineering are major positives.
The proliferation of AI, the global push for localized chip manufacturing capacity, and the ubiquity of semiconductors in new consumer and commercial products represent solid long-term growth prospects for Lam Research.
The gradual improvement in memory spending bodes well for wafer fabrication equipment spending, which, in turn, is expected to drive the company’s top-line growth in the long run.
However, escalating tensions between the United States and China due to the imposition of export curbs on China’s chip companies by the U.S. Department of Commerce are making LRCX’s prospects foggy. A challenging global macroeconomic environment and persistent inflation are significant concerns for the company.
Conclusion
No matter how the upcoming quarterly results play out, we suggest that those who already own the stock may stay invested for a year or so and observe how Lam Research performs in the recovering semiconductor industry. New short-term investors should avoid buying the LRCX stock right now, given the uncertainties surrounding the company’s prospects.
Image: Bigstock
Pre-Q4 Earnings: How Should You Play Lam Research (LRCX)?
Lam Research (LRCX - Free Report) is scheduled to release its fourth-quarter fiscal 2024 results on Jul 31.
For fourth-quarter fiscal 2024, the company expects revenues of $3.8 billion (+/- $300 million). The Zacks Consensus Estimate for the same is pegged at $3.81 billion, indicating 18.9% growth from the figure reported in the year-ago quarter.
Management expects non-GAAP earnings of $7.50 (+/- 75 cents) per share. The consensus mark for earnings is pegged at $7.52 per share, indicating growth of 25.8% from the figure reported in the year-ago quarter. The earnings figure has been unchanged over the past 30 days.
Image Source: Zacks Investment Research
Lam Research has an impressive earnings surprise history. In the last reported quarter, the company delivered an earnings surprise of 7.3%. The company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 11.39%.
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Lam Research this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
LRCX has an Earnings ESP of 0.00% and carries a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors to Note
Lam Research has been benefiting from the solid rebound in the semiconductor industry.
Improving memory spending on the back of the growing proliferation of AI and machine learning, as well as Generative AI, is expected to have benefited the company in the fiscal fourth quarter. Increasing demand for advanced AI-centric chips is expected to have been a positive.
Increasing DRAM spending, driven by high bandwidth memory-related demand, is expected to have benefited Lam Research in the quarter under review.
Technology upgrades are anticipated to have boosted NAND spending. This, in turn, is expected to have been a plus.
Solid momentum in 3D DRAM and advanced packaging are anticipated to have been a tailwind for the company.
LRCX’s strong investments in expanding semiconductor fabrication capabilities, and research and development activities, along with strength in Semiverse solutions, are expected to have aided its quarterly performance.
With Semiverse simulation tools, the company has accelerated innovation in NAND high aspect ratio memory hole etch production. This is expected to have been a plus.
Meanwhile, its leading-edge investments are expected to have benefited the foundry/logic category.
Growing etch and deposition intensity, owing to increasing technology inflections in 3D architectures, is likely to have been another positive.
Lam Research is expected to have gained solid customer momentum on the back of its robust tools, which enable foundry logic inflections.
The growing proliferation of 5G and the Internet of Things is likely to have continued bolstering the adoption rate of the company’s advanced semiconductor and memory solutions in the fiscal fourth quarter.
All these factors are expected to have aided growth in the system revenues in the quarter under review.
The Zacks Consensus Estimate for fiscal fourth-quarter system revenues is pegged at $2.38 billion, indicating growth of 39.4% from the year-ago quarter’s actual.
Price Performance & Valuation
Lam Research’s shares have appreciated 14.2% on a year-to-date basis, underperforming the industry, the Zacks Computer & Technology sector and the S&P 500 index’s rise of 19.6%, 18.2% and 14.5%, respectively.
LRCX has also underperformed its peers Applied Materials (AMAT - Free Report) and KLA Corporation (KLAC - Free Report) , which have returned 27.4% and 35.4% year to date.
Year-to-Date Price Performance
Image Source: Zacks Investment Research
Now, let us look at the value Lam Research offers investors at current levels.
Currently, LRCX is trading at a discount, with a forward 12-month P/E of 24.88X compared with the industry’s 27.85X and lower than the median of 26.13X, reflecting a good opportunity for investors.
Image Source: Zacks Investment Research
Investment Thesis
Lam Research’s strong position in the semiconductor industry, which is on its recovery path this year, presents a compelling investment opportunity. The company’s strength in deposition and etch, core competencies in areas such as nanoscale applications enablement, chemistry, plasma and fluidics, and advanced systems engineering are major positives.
The proliferation of AI, the global push for localized chip manufacturing capacity, and the ubiquity of semiconductors in new consumer and commercial products represent solid long-term growth prospects for Lam Research.
The gradual improvement in memory spending bodes well for wafer fabrication equipment spending, which, in turn, is expected to drive the company’s top-line growth in the long run.
However, escalating tensions between the United States and China due to the imposition of export curbs on China’s chip companies by the U.S. Department of Commerce are making LRCX’s prospects foggy. A challenging global macroeconomic environment and persistent inflation are significant concerns for the company.
Conclusion
No matter how the upcoming quarterly results play out, we suggest that those who already own the stock may stay invested for a year or so and observe how Lam Research performs in the recovering semiconductor industry. New short-term investors should avoid buying the LRCX stock right now, given the uncertainties surrounding the company’s prospects.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.