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Lam Research (LRCX) reached new all time highs before pulling back after reporting its Q2 (Dec) results last night. The semi-cap company continued its streak of EPS beats, while revenue increased 22.1% to $5.34 bln, well above expectations. LRCX also followed up with another upside guide for the following quarter, expecting EPS of $1.25-1.45 and revenue of $5.4-6.0 bln in Q3.

• LRCX said all indications suggest the industry is still in the early stages of the AI build-out, with end markets signaling strong appetite for greater compute and storage capacity.
• Systems revenue increased 28% yr/yr to $3.36 bln, led by foundry, which represented 59% of systems revenue on strength in leading-edge investment plus mature-node spending in China.
• Memory was 34% of systems revenue. DRAM hit a record at roughly 23% of systems revenue as HBM investment remained strong on AI demand. NAND was 11% of systems revenue (down from 18% in Q1), but management said NAND demand is growing faster than expected.
• Gross margin fell 90 bps sequentially to 49.7% on a less favorable customer mix. China fell to 35% of total revenue. For Q3, LRCX guided gross margin to 48%-50%, again citing a slight mix headwind.
• LRCX offered a bullish 2026 WFE outlook, expecting WFE around $135 bln ($110 bln in 2025), driven by continued investment in DRAM and leading-edge foundry/logic for the AI build-out.
• Advanced packaging was also notable, with LRCX expecting the business to grow more than 40% in CY26, outpacing WFE growth, as more devices shift to complex packaging and next-gen HBM stacking adds more high-value packaging steps.
• LRCX believes much of the market will be undersupplied in 2026 due to cleanroom space constraints, keeping CY26 back-half weighted as chipmakers work to add capacity and bring more space online. Even so, LRCX expects revenue to grow sequentially each quarter.

Briefing.com Analyst Insight

LRCX's quarter reinforced that the AI capex cycle is not just lifting wafer fab demand, but also driving more process complexity that plays to LRCX's core franchises. What stood out was management's upbeat 2026 WFE outlook, signaling demand remains strong even with cleanroom space still the main bottleneck. Advanced packaging was also notable, with LRCX expecting growth that outpaces WFE as packaging gets more complex across more devices and HBM keeps stacking. The one near-term watch item is mix, with margins expected to be a bit softer as China's contribution steps down. Ultimately, LRCX remains a clear beneficiary of the AI capex cycle, but with the stock at new highs and valuation elevated, there is little room for missteps.