Did The Market Read Lam Research Stock Right

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Shares of Lam Research (LRCX) rose 63.9% in the twelve months to October 28, 2026, compared with 13.7% for the S&P 500. The chip equipment maker reported larger quarters throughout that year, and on October 21, 2026, management announced a fifth straight quarter of record revenue. A gain of that size accumulates over many trading days, but a few of them matter far more than the rest. One of those was a decline: the stock lost 11.8% on October 22, 2026, the day after the announcement. A report that day tied the fall to supply constraints that could limit shipments and to Lam's warning of lower revenue from China. Which news did the shares respond to most strongly?

Lam Research's Best Day Came On Quarterly Results

The stock climbed 18.0% on July 30, 2026, marking its largest one-day gain of the year. The move came the day after Lam reported results for its fiscal fourth quarter of 2026. News reports that day said earnings came in stronger than expected.

The results arrived as management continued to raise its forecast for calendar 2026 chipmaker equipment spending. On the October 21 call, management said that forecast began the year in the mid-$130 billion range and currently stood in the mid-$150 billion range. Lam did not climb alone. Peer Applied Materials gained 84% over the same twelve months, outpacing Lam.

How Much More Lam Research Earns Now

Lam's revenue grew 54.4% from a year earlier in fiscal Q1 2027, the quarter ended September 27, 2026. That followed a 27.7% increase in fiscal Q1 2026. Management said systems revenue from memory chipmakers also reached a record level during the period.

Profit per share followed a similar trajectory. Diluted earnings per share for the twelve months to September 27, 2026, were $6.71, compared with $4.54 a year earlier. That 48% rise trailed the stock's 63.9% gain by about 16 percentage points, so over the full year the shares ran somewhat ahead of what the company earned.

In between, investors paid far more for those profits. At their June 30, 2026, high close, the shares traded at 74.6 times trailing earnings. That close was $432.87, and the stock has since fallen about 41% to $253.82. At the October 28 close, shares traded at 37.6 times trailing earnings, compared with 22.6 for the S&P 500. Buyers still pay a much higher price for each dollar of Lam's profit than they do for the broader market's.

Lam's Sales Still Depend On Chipmakers' Spending

The rally did not change what most of Lam's sales depend on: how much chipmakers spend on new equipment. Lam's revenue has shrunk before, falling 12.0% in the twelve months to September 24, 2023.

Management also expects growth to be held back in 2027. On the October 21 call, management said clean room space and supply constraints for certain components will keep holding chipmakers and equipment companies back from fully meeting demand. The company added that the revenue guide for the December 2026 quarter would have been a bit higher without near-term supply chain constraints.

Management issued a preliminary forecast of more than $200 billion for industry equipment spending in 2027, and said the company would provide more detail on its next call. That 2027 spending forecast is the number to watch when Lam reports in January 2027.

Separately, check out our take on How Tesla Blundered.

How To Act On LRCX?

Not necessarily on Lam Research alone, if your goal is long-term wealth. Wealth is built by owning the companies that keep outperforming, the leaders of their industries, wherever they are. Lam Research is one. Over the five years to October 2026, its stock rose 372%, ahead of 26 of the 27 other companies in Semiconductor Materials & Equipment, where the typical company rose 72%.

Finding companies like these takes comparison across industries and sectors, and that is what the Trefis High Quality (HQ) Portfolio does. It holds 30 quality companies in equal weight and, since its inception in September 2020, has returned more than 105%, ahead of a benchmark that combines the S&P 500, S&P Mid-cap and Russell 2000. See how we find the leaders.

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