Holding · 1.2% · hold (from 1.2%) · mega · Technology · last 333.89
Entry 320.00–335.00 · Stop 298.00 · Target 400.00 · Hold (on target)
Long thesis (forward P/E 28x, four straight beats), but there is no room in the combined Technology budget to add before the Oct 21 report.
Thesis (long, position, conviction 64)
Bull: Lam Research is firing on all cylinders operationally: revenue grew 15.1% sequentially to $6.72B with GAAP operating margin expanding to 37.4% and diluted EPS of $1.81, both up sharply quarter-over-quarter (F-LRCX-1, F-LRCX-2, F-LRCX-3). The balance sheet strengthened to $5.6B cash (F-LRCX-5), and the company has beaten EPS estimates in all four of the last four quarters (F-LRCX-12), with Street sentiment overwhelmingly positive (10 strong buys, 25 buys, 0 sells; F-LRCX-11). Technically, the stock trades above its 20/50/200-day moving averages (F-LRCX-7) with RSI at 59.4 (room before overbought) and a constructive 12-month return of 130% (F-LRCX-8). The stock has consolidated for the last three months (+0.33%, F-LRCX-9) while fundamentals kept improving, which looks like healthy base-building ahead of the 2026-10-21 earnings report rather than deterioration, and sets up an attractive entry versus the 52-week high.
Bear: Valuation is rich on a trailing basis (60x trailing P/E per F-LRCX-10), and while forward P/E of 28.38 is more reasonable, it still assumes continued strong execution. The stock has underperformed SPY by 4.45 points over the past three months (F-LRCX-9) despite strong fundamentals, suggesting some rotation away from semicap names or profit-taking after the 130% run. Geographic concentration is a real risk: Taiwan and China together made up 53% of revenue last quarter (F-LRCX-6), leaving the company exposed to export-control actions or a China slowdown. The upcoming 2026-10-21 earnings print carries binary risk after such a strong run — any miss against the $2.22 EPS / $8.3B revenue consensus embedded in estimates could trigger a sharp pullback given how far the stock sits below its own 52-week high already (-22.87%), which itself signals volatility in this name.
Valuation: Trailing P/E of 60x looks expensive in isolation, but it reflects a low prior-year earnings base being annualized; the forward P/E of 28.38 is far more reasonable set against 37%+ GAAP operating margins, sequential revenue growth of 15%, and a clean four-quarter EPS beat streak. At today's price the market is paying a reasonable multiple for above-average profitability and execution, not demanding perfection — this is a quality-at-a-fair-price setup rather than deep value or a bubble multiple.
undated: Continued EPS beat streak (4-for-4 trailing quarters) could extend if execution holds
Facts
F-LRCX-1: Revenue for the quarter ended 2026-06-28 was $6.722 billion, up 15.1% from the prior quarter. (as of 2026-07-29)[E4593]source
F-LRCX-2: GAAP operating margin was 37.4% for the quarter ended 2026-06-28, compared with 35.0% for the quarter ended 2026-03-29. (as of 2026-07-29)[E4593]source
F-LRCX-3: GAAP diluted EPS was $1.81 for the quarter ended 2026-06-28, compared with $1.45 for the quarter ended 2026-03-29. (as of 2026-07-29)[E4593]source
F-LRCX-4: Net income for the quarter ended 2026-06-28 was $2.28 billion on a GAAP basis. (as of 2026-07-29)[E4593]source
F-LRCX-5: Cash, cash equivalents, and restricted cash totaled $5.60 billion at 2026-06-28, up from $4.77 billion at 2026-03-29. (as of 2026-07-29)[E4593]source
F-LRCX-6: Taiwan accounted for 27% and China for 26% of revenue in the quarter ended 2026-06-28. (as of 2026-07-29)[E4593]source
F-LRCX-7: LRCX closed at $333.89 on 2026-10-06, above its 20-day ($307.85), 50-day ($307.45), and 200-day ($276.43) moving averages. (as of 2026-10-06)[E4339]
F-LRCX-8: LRCX's 12-month price return through 2026-10-06 was 130.05%. (as of 2026-10-06)[E4339]
F-LRCX-9: LRCX's 3-month return through 2026-10-06 was 0.33%, and its relative return versus SPY over that period was -4.45 percentage points. (as of 2026-10-06)[E4339]
F-LRCX-10: Yahoo's fundamentals snapshot dated 2026-10-06 reported a trailing P/E of 60.05 and a forward P/E of 28.38. (as of 2026-10-06)[E4340]
F-LRCX-11: The September 2026 analyst recommendation counts were 10 strong buys, 25 buys, and 6 holds, with no sells or strong sells. (as of 2026-10-06)[E4362]
F-LRCX-12: The analyst dataset shows LRCX exceeded its EPS estimate in each of the four reported quarters through 2026-06-30; the reported surprise percentages were 5.99%, 4.93%, 6.41%, and 1.09%. (as of 2026-10-06)[E4362]
What would change the view
A daily close below $298 (stop level, below the 50-day MA)
EPS or revenue miss versus the $2.2199 / $8.307B consensus on 2026-10-21
GAAP operating margin falling back below 35% (prior quarter level) in the next report
New or expanded export control actions specifically targeting Lam's China/Taiwan equipment sales
Data quality
Quality score 100/100.
Gap: The quote block is timestamped 2026-10-07, after the context pack's stated date of 2026-10-06; the market facts above use the daily close dated 2026-10-06 instead.
Gap: The SEC quarterly fundamentals block contains reported quarters only through 2026-03-29; the 2026-06-28 quarter figures here come from the company's 2026-07-29 earnings release.
Gap: The fundamentals snapshot reports different trailing P/E values from Yahoo and Finnhub (60.05 and 59.56, respectively); the cited valuation fact uses Yahoo's figure.