Lam Research (NASDAQ:LRCX) Surprises With Q1 Sales, Inventory Levels Improve
Semiconductor equipment maker Lam Research (NASDAQ:LRCX) reported Q1 CY2026 results exceeding the market’s revenue expectations, with sales up 23.8% year on year to $5.84 billion. On top of that, next quarter’s revenue guidance ($6.6 billion at the midpoint) was surprisingly good and 9.4% above what analysts were expecting. Its non-GAAP profit of $1.47 per share was 7.9% above analysts’ consensus estimates.
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Lam Research (LRCX) Q1 CY2026 Highlights:
- Revenue: $5.84 billion vs analyst estimates of $5.74 billion (23.8% year-on-year growth, 1.7% beat)
- Adjusted EPS: $1.47 vs analyst estimates of $1.36 (7.9% beat)
- Adjusted Operating Income: $2.05 billion vs analyst estimates of $1.97 billion (35% margin, 3.9% beat)
- Revenue Guidance for Q2 CY2026 is $6.6 billion at the midpoint, above analyst estimates of $6.03 billion
- Adjusted EPS guidance for Q2 CY2026 is $1.65 at the midpoint, above analyst estimates of $1.45
- Operating Margin: 35%, up from 33.1% in the same quarter last year
- Free Cash Flow Margin: 13.9%, down from 21.6% in the same quarter last year
- Inventory Days Outstanding: 124, down from 136 in the previous quarter
- Market Capitalization: $322.6 billion
"Lam delivered record revenue and EPS in the March quarter as AI-driven demand reshapes the semiconductor industry," said Tim Archer, Lam Research's President and Chief Executive Officer.
Company Overview
Founded in 1980 by David Lam, the man who pioneered semiconductor etching technology, Lam Research (NASDAQ:LRCX) is one of the leading providers of wafer fabrication equipment used to make semiconductors.
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Luckily, Lam Research’s sales grew at a solid 10.3% compounded annual growth rate over the last five years. Its growth surpassed the average semiconductor company and shows its offerings resonate with customers, a great starting point for our analysis. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions (which can sometimes offer opportune times to buy).
Long-term growth is the most important, but short-term results matter for semiconductors because the rapid pace of technological innovation (Moore's Law) could make yesterday's hit product obsolete today. Lam Research’s annualized revenue growth of 23.4% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated. 
This quarter, Lam Research reported robust year-on-year revenue growth of 23.8%, and its $5.84 billion of revenue topped Wall Street estimates by 1.7%. Beyond the beat, this marks 8 straight quarters of growth, showing that the current upcycle has had a good run - a typical upcycle usually lasts 8-10 quarters. Company management is currently guiding for a 27.6% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 23.9% over the next 12 months, similar to its two-year rate. This projection is particularly noteworthy for a company of its scale and suggests the market sees success for its products and services.
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Product Demand & Outstanding Inventory
Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’ capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.
This quarter, Lam Research’s DIO came in at 124, which is 40 days below its five-year average. At the moment, these numbers show no indication of an excessive inventory buildup.
Key Takeaways from Lam Research’s Q1 Results
We were impressed by Lam Research’s optimistic revenue guidance for next quarter, which blew past analysts’ expectations. We were also glad its EPS outperformed Wall Street’s estimates. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 4% to $276.56 immediately following the results.
Indeed, Lam Research had a rock-solid quarterly earnings result, but is this stock a good investment here? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).
