Lam Research Corporation

(NASDAQ Global Select)
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Bullish +55

Jim Cramer Likes Lam Research but Says Buy Just 25% of Your Position

Earnings report Financial outlook AI-generated analysis

📈 Jim Cramer labeled Lam Research the best in capital equipment but recommended buying only 25% of a planned position immediately due to recent price swings.

💰 Lam Research reported record revenue of $8.22 billion, a 54% increase year-over-year, driven by AI demand for advanced deposition and etch tools.

📉 The stock dropped 6.38% in the session following earnings and fell 26.47% over the past month from its high of $323.86.

🇨🇳 China represented 35% of total revenue, though management expects this share to drop meaningfully in the December quarter as domestic spending falls.

⚠️ CEO Tim Archer noted that near-term supply chain constraints prevented the revenue guidance from being even higher than reported.

🔮 Management provided forward-looking guidance for the December quarter with revenue expected around $8.60 billion and EPS of $2.33.

💸 The company maintains a strong balance sheet with $3 billion remaining on its buyback authorization and targets returning 85% of free cash flow to shareholders.

Bullish Signals
  • Lam Research achieved record revenue of $8.22 billion, representing a 54% surge year-over-year driven by AI demand.
  • The company delivered the sixth consecutive quarterly earnings beat with Non-GAAP EPS of $2.20 exceeding analyst consensus.
  • Free cash flow more than doubled to $3.24 billion, reflecting a 103% increase from the prior year period.
  • Operating income rose significantly by 79.5%, demonstrating strong operational leverage and profitability growth.
  • Management extended customer visibility through 2028, indicating sustained demand for semiconductor manufacturing equipment.
Risk Factors
  • The stock price declined sharply by 26.47% over the past month, suggesting high volatility and potential short-term sentiment weakness.
  • Near-term supply chain constraints limited revenue growth, preventing the company from achieving a higher guidance level.
Full Analysis
Jim Cramer recently praised Lam Research (LRCX) as the best in semiconductor capital equipment but advised investors to purchase only a quarter of their intended position immediately due to recent stock volatility. On CNBC, Cramer highlighted the company's strong fundamentals while cautioning against aggressive entry given the stock's sharp decline over the past month. Lam Research reported exceptional financial results for the quarter ended September 30, 2026, with revenue surging 54% to $8.22 billion and free cash flow more than doubling to $3.24 billion. This performance marks the sixth consecutive quarterly earnings beat, driven by robust demand for deposition and etch tools fueled by AI expansion in semiconductor manufacturing. Despite the strong operational metrics, the stock faces specific headwinds including significant exposure to China, which accounted for 35% of revenue, and ongoing supply chain constraints that limited potential growth. Management expects Chinese spending to decline meaningfully in the December quarter, adding a layer of uncertainty to the company's near-term outlook despite its long-term visibility extending through 2028.