LRCX Stock Sinks As Analysts Trim Targets, See Supply Constraints – But Longer-Term Bull Case Remains

• Lam Research reported record quarterly revenue of $8.22 billion and adjusted EPS of $2.20, both ahead of Street estimates.
• BofA said Lam's December-quarter outlook would have been stronger without industry supply constraints.
• Needham flagged an unexpected slowdown despite strong demand from China and NAND memory customers.

Lam Research Corp. (LRCX) shares tumbled more than 8% in Thursday's premarket trading as multiple firms lowered their price targets following the semiconductor equipment maker's latest earnings report, 

The cuts followed better-than-expected fiscal first-quarter (Q1) results on Wednesday, although analysts maintained positive ratings despite the company's December-quarter outlook offering limited upside to expectations.

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As of this writing, LRCX stock was down over 8% and was among trending tickers on Stocktwits.

Analysts See Supply Constraints Limiting Near-Term Growth

BofA argued that Lam was "supply constrained, not demand constrained," according to The Fly. 

The firm noted that September-quarter revenue and pro forma earnings per share were each 1% above Wall Street forecasts, while December-quarter guidance would have been higher without industry supply constraints.

Needham similarly cited supply bottlenecks behind an unexpected deceleration in the December quarter. The firm said strength in China and NAND memory drove Lam's September-quarter revenue and gross margin above estimates.

MS Flags Expectations Reset, Citi Sees 2027 Outperformance

Morgan Stanley called the December-quarter expectations miss "undoubtedly a negative," but said the earnings report represented an important reset in expectations for semiconductor production equipment.

Citi analyst Atif Malik attributed his target reduction to lower market valuation multiples but maintained his expectation that Lam would outperform the broader wafer fabrication equipment market in 2027.

What Lam's Latest Earnings Revealed

Lam's fiscal first-quarter revenue surged 22% sequentially to a record $8.22 billion, beating FiscalAI’s consensus estimate of $8.14 billion. Adjusted EPS came in at $2.20, topping expectations of $2.18.

The company reported a non-GAAP gross margin of 52.4% and an operating margin of 40.2%. Management expects the global wafer fabrication equipment market to exceed $200 billion in calendar 2027, compared with an estimated mid-$150 billion range in 2026.

What Retail Thinks of LRCX Stock

On Stocktwits, retail investors’ sentiment around LRCX stock remained in ‘extremely bullish’ territory amid extremely high message volume.

So far this year, LRCX stock has rallied nearly 41%. By comparison, the VanEck Semiconductor ETF (SMH) and the  State Street Technology Select Sector SPDR ETF (XLK), which hold the stock, have rallied around 49% and 31%, respectively, over this period.

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