Lam Research Corporation

(NASDAQ Global Select)
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Bullish +75

Applied Materials Jumps 11% Ahead of Earnings; Lam Research Surges 9%, ASML Rises 6%

Earnings report Financial outlook AI-generated analysis

πŸ“ˆ Applied Materials stock jumped 11% in afternoon trading ahead of its November 12 earnings report as traders bet on booming chip equipment spending.

πŸ’° Lam Research surged 9%, having announced a $25 billion share repurchase authorization on top of a remaining $3 billion balance from prior authorizations.

πŸ“Š Applied Materials trades at 18x forward earnings, making it the cheapest valuation among the four major chip equipment leaders including KLA and ASML.

πŸš€ CEO Gary Dickerson stated he has high confidence that 2027 will be another strong growth year for Applied Materials due to increased demand visibility.

πŸ’Ύ Applied Materials recorded record DRAM revenue in Q3 FY2026, with high-bandwidth memory (HBM) packaging growing 52% year over year.

πŸ”¬ Leading-edge foundry-logic, dynamic random-access memory (DRAM), and advanced packaging are expected to drive the bulk of wafer fabrication equipment growth in 2026 and 2027.

⚠️ CEO Gary Dickerson warned that China export controls and clean-room availability limits threaten future shipments for Applied Materials.

πŸ“‰ Lam Research previously faced a sharp stock decline after management warned that supply constraints would limit revenue, highlighting sector volatility.

πŸ”­ Both ASML and Lam Research indicated customer visibility for their products stretches through 2028, framing the long-term opportunity for peers like Applied Materials.

πŸ“‰ Applied Materials guidance calls for Q4 FY2026 revenue of $10.25 billion plus or minus $500 million and non-GAAP EPS of $4.02 plus or minus 20 cents.

Bullish Signals
  • Lam Research stock surged 9% following a rebound that began in the prior session after announcing a massive $25 billion share repurchase authorization.
  • Lam Research maintains a remaining $3 billion balance from its prior buyback authorization, signaling continued commitment to returning capital to shareholders.
  • Management at Lam Research forecast wafer fabrication equipment spending in the mid-$150 billion range for 2026 and more than $200 billion in 2027, indicating strong market demand.
  • Lam Research benefits from a rebound in sentiment after its previous supply-constraint warning, suggesting potential stabilization or improvement in operational outlook.
Risk Factors
  • Lam Research stock previously suffered a sharp drop after management warned that supply constraints would limit revenue, serving as a cautionary tale for the sector.
  • The company faces ongoing risks related to supply constraints which could continue to impact revenue realization if not resolved before the 2026 forecast period.
Full Analysis
Chip equipment stocks rallied significantly ahead of earnings reports, with Applied Materials (AMAT) surging 11% and peer Lam Research (LRCX) jumping 9%. The market is positioning for a booming cycle in wafer fabrication equipment spending, driven by artificial intelligence expansion. Traders view Applied Materials as a bellwether for the sector, noting its valuation at 18x forward earnings makes it the cheapest among the four major equipment leaders compared to peers like KLA and ASML. Applied Materials CEO Gary Dickerson expressed high confidence that 2027 will be another strong growth year, citing increased demand visibility. The company expects leading-edge foundry-logic, dynamic random-access memory (DRAM), and advanced packaging to drive the bulk of wafer fabrication equipment growth in 2026 and 2027. Specifically, Applied Materials reported record DRAM revenue in Q3 FY2026, including high-bandwidth memory (HBM) packaging, which grew 52% year over year. Despite the bullish sentiment, risks remain regarding external factors that could impact shipments. CEO Dickerson highlighted threats from China export controls and limited clean-room availability, which determine what the company can ship next year. Lam Research previously faced a sharp stock drop after warning that supply constraints would limit revenue, serving as a reminder of how quickly sentiment can turn in this sector. The upcoming Q4 FY2026 earnings report for Applied Materials on November 12 is expected to set the tone for the broader chip equipment group. Management guided to revenue of $10.25 billion and non-GAAP EPS of $4.02, though analysts call for slightly higher figures. A strong outlook could extend the sector's rally, while a cautious report could reset expectations across all chip equipment stocks.