Lam Research (LRCX, Financial) has seen its stock rise by 2% today after significantly beating Q3 (March) earnings and revenue estimates. The company, a key player in the wafer fab equipment (WFE) sector, also provided an optimistic forecast for Q4 (June), with expected earnings per share (EPS) and revenue figures surpassing the consensus.
The recent performance of Lam Research comes as a reassurance to investors, especially after concerns were raised last week due to Taiwan Semi (TSM, Financial) cutting its 2024 outlook, ASML's (ASML, Financial) disappointing March quarter bookings growth, and no updates from Super Micro Computer (SMCI, Financial). LRCX's positive report has helped its shares to perform well against the backdrop of a generally declining market.
- LRCX's Q3 highlights include an adjusted EPS of $7.79, nearly hitting the top end of its $6.50-8.00 guidance, and a slight 2.0% year-over-year revenue decrease to $3.79 billion, which is better than expected.
- The company has observed strong demand for DRAM and NAND, driven by the growing need for high-bandwidth memory and continued investments in China, leading to an increased WFE spending forecast for 2024.
- Generative AI is significantly impacting demand, benefiting LRCX's DRAM and Foundry/Logic segments now, with expected growth in the NAND sector. This trend is likely to favor Western Digital (WDC, Financial) over Seagate Tech (STX, Financial) due to the former's focus on NAND-based storage solutions.
- With AI's expansion, LRCX projects a solid Q4 outlook, marking the first quarter of year-over-year revenue growth since Q2 2023 (December).
The Q3 report from LRCX underscores the ongoing positive influence of AI demand on its financial performance, hinting at a significant recovery expected to start next year. This outcome not only benefits LRCX but also sets a promising stage for its peers, including KLA Corp (KLAC, Financial), which is set to announce its March quarter results soon, NXP Semi (NXPI, Financial) on April 29, and Applied Materials (AMAT, Financial) on May 16.
