Lam Research lifts WFE outlook above $200B

Lam Research (LRCX) reported revenue of about $8.22 billion for the September 2026 quarter, representing 22% sequential growth and 54% growth versus the same period in 2025. Non-GAAP gross margin reached a record 52.4%, and non-GAAP operating margin climbed to 40.2%, exceeding 40% for the first time in the company’s history. Non-GAAP diluted EPS was $2.20, supported by record revenue and increased profitability.

Alongside the strong quarter, Lam outlined its wafer fab equipment spending view, estimating WFE in the mid-$150 billion range for calendar 2026 and giving a preliminary forecast for more than $200 billion in calendar 2027. Management indicated that percentage growth in 2027 is expected to be led by DRAM, followed by leading-edge foundry logic and NAND.

For the December 2026 quarter, Lam guided revenue to $8.6 billion plus or minus $400 million. The company expects non-GAAP gross margin of 52.5% plus or minus 1 percentage point and non-GAAP operating margin of 40.5% plus or minus 1 percentage point. Non-GAAP diluted EPS is projected at $2.33 plus or minus $0.15, based on approximately 1.253 billion assumed diluted shares.

Management indicated that systems revenue growth is expected to exceed 40% year over year for calendar 2026 at the midpoint of the December quarter guidance, reflecting continued strong demand for Lam’s tools. Ten new Tier 1 fabs are expected to come online during 2027, with their contributions phasing in over the year.

In the September quarter, memory systems revenue and foundry systems revenue each accounted for 46% of total systems revenue, while logic and other revenue represented 8%. Memory systems revenue reached a record dollar level and grew 120% versus last year, with DRAM spending focused on technology additions and upgrades across the 1α, 1β and 1γ nodes. Foundry also achieved record revenue, driven by investments in leading-edge process nodes and advanced packaging.

China contributed 35% of Lam’s total revenue, reflecting strong investments by both domestic and multinational customers in the region. The Customer Support Business Group generated about $2.5 billion of revenue, marking the fourth consecutive record quarter and 40% growth versus the prior year, underscoring the importance of installed-base services and support.

Free cash flow for the September quarter reached about $3.2 billion, a record for the period. Lam allocated $1 billion to share repurchases during the quarter, and $3 billion remains on the board-authorized program. Deferred revenue stood at $2.66 billion, increasing by $227 million from the June quarter, primarily due to higher sales volume.

Headcount rose to 24,300 regular full-time employees, an increase of approximately 1,900 from the June quarter, mainly to support manufacturing and field activities as well as research and development. Total inventory increased to $4.6 billion, while inventory turns improved to 3.4 times, the highest level in nearly seven years, reflecting higher throughput despite larger inventory levels.