Lam Research surges on AI-driven earnings beat, guidance boost
Semiconductor equipment maker raises Q1 outlook as accelerating AI demand fuels multi-year growth trajectory
Lam Research shares rallied in extended trading Tuesday after the semiconductor equipment maker delivered stronger-than-expected quarterly results and raised guidance, chief executive Tim Archer citing accelerating artificial intelligence demand that the company believes will drive multi-year outperformance.
The Fremont, California-based manufacturer reported earnings per share of $1.27 for the quarter ended December 28, 2025, beating analyst estimates of $1.17 by 8.7%. Revenue reached $5.345 billion, topping the $5.239 billion consensus forecast, according to the company's earnings release.
Looking ahead, Lam lifted its first-quarter guidance to $5.7 billion in revenue, representing a 7% sequential increase, with projected EPS of $1.35. The upbeat outlook surprised Wall Street analysts who had been anticipating more modest growth amid broader uncertainty about semiconductor capital spending cycles.
"AI is accelerating," Archer said in the earnings announcement, highlighting the company's expanding product portfolio for three-dimensional memory devices and advanced packaging technologies. The CEO framed the opportunity as a "multi-year outperformance" story for Lam, positioning the company to benefit from sustained investment in chips powering data centers and AI applications.
The results come amid a broader technology earnings season where major players are signaling continued heavy investment in AI infrastructure. Meta Platforms said Tuesday that 2026 spending would blow past analysts' estimates, while ServiceNow reported strong fourth-quarter results and announced an additional $5 billion for share repurchases.
Lam Research, with a market capitalization of approximately $281 billion, has been riding the wave of increased semiconductor spending driven by AI workloads. The company's equipment is critical for manufacturing the advanced chips used in data centers training large language models and running AI inference at scale. Its portfolio spans both front-end wafer processing and back-end packaging technologies.
The strong quarter extends Lam's momentum from recent periods. The company had previously reported 27.7% year-over-year revenue growth and 44.3% earnings growth in its most recent quarterly filing, according to market data. Analysts have been largely positive on the stock, with 22 rating it a buy or strong buy against 11 hold recommendations and one sell, though the consensus target price of $215.35 suggests some see limited upside from current levels.
Semiconductor equipment makers have emerged as key beneficiaries of the AI boom, as chipmakers like NVIDIA, AMD, and Intel race to increase production capacity. While some investors have worried about potential overinvestment and eventual cyclicality in the sector, Lam's management appears confident that the current demand represents a structural shift rather than a temporary spike.
The company's focus on 3D NAND memory and advanced packaging aligns with trends in chip architecture that are essential for AI applications. These technologies allow for greater density and performance in memory and processing power, both critical for handling the massive datasets required for machine learning workloads.
Investors will be watching for more details on Lam's product roadmap and customer commitments when the company holds its earnings conference call later this week. The guidance raise suggests management has visibility into near-term orders that exceeded internal expectations heading into the quarter.
As the semiconductor capital equipment cycle enters what appears to be another expansion phase, Lam Research's ability to capture share in AI-related manufacturing will be a key driver of investor sentiment. The company's performance in the coming quarters will serve as a bellwether for broader industry health and the sustainability of the AI-driven investment thesis.