Lam Research Corporation (LRCX) - Q3 2026 10-Q Summary
Business Context and Reporting Period
This filing covers the quarterly period ended March 29, 2026 (Q3 Fiscal 2026). Lam Research is a global supplier of wafer fabrication equipment and services, serving memory, foundry, and logic/integrated device manufacturing markets. The company operates in seven geographic regions, with significant exposure to China, Korea, and Taiwan. The reporting period includes 13 weeks.
Key Financial Metrics
| Metric | Q3 2026 (3 Months) | Q3 2025 (3 Months) | YTD 2026 (9 Months) | YTD 2025 (9 Months) |
|---|---|---|---|---|
| Revenue | $5.84 Billion | $4.72 Billion | $16.51 Billion | $13.26 Billion |
| Gross Margin | $2.91 Billion (49.8%) | $2.31 Billion (49.0%) | $8.25 Billion (49.9%) | $6.39 Billion (48.2%) |
| Operating Income | $2.05 Billion | $1.56 Billion | $5.69 Billion | $4.16 Billion |
| Net Income | $1.83 Billion | $1.33 Billion | $4.99 Billion | $3.64 Billion |
| Diluted EPS | $1.45 | $1.03 | $3.95 | $2.81 |
| Cash & Equivalents | $4.75 Billion | (Balance Sheet data for Q3 2025 not provided in text) | ||
| Operating Cash Flow (YTD) | $4.40 Billion | $3.62 Billion | ||
| Long-Term Debt | $3.73 Billion | (Balance Sheet data for Q3 2025 not provided in text) |
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 24% year-over-year (YoY) for the quarter and 24% YoY for the nine-month period. Growth was driven by increased systems revenue (up 23% YoY) and customer support revenue (up 25% YoY).
- Market Mix: Foundry market share of revenue increased to 54% in Q3 2026 from 48% in Q3 2025. Memory market share decreased to 39% from 43%.
- Geographic Shifts: China revenue grew to $2.00 billion (34% of total), up from $1.47 billion in the prior year quarter. Korea and Taiwan also saw significant increases.
- Profitability: Gross margin percentage improved to 49.8% from 49.0% YoY, attributed to improved factory efficiencies. Operating expenses increased due to higher headcount and workforce optimization costs.
- Debt Reduction: The company settled $750 million of Senior Notes upon maturity in March 2026. Long-term debt remains at approximately $3.73 billion.
Guidance, Outlook, and Risks
- Outlook: Management expects continued growth in 2026 driven by AI market demand across memory and non-memory segments. They anticipate secular demand for semiconductors and technology inflections (3D scaling, advanced packaging) will drive the served available market.
- Capital Allocation: The company remains aggressive on capital return. In Q3, they repurchased $796 million of stock (including ASR settlements) and paid $325 million in dividends. Approximately $4.29 billion remains available under the current repurchase program.
- Risks & Contingencies:
- Geopolitics: Significant exposure to trade restrictions and export controls, particularly regarding China (37% of YTD revenue). The filing notes potential impacts from U.S.-China trade relations and export license requirements.
- Supply Chain: Risks related to shortages of critical materials (e.g., rare earth elements from China) and disruptions from global conflicts (e.g., Middle East instability affecting oil and commodity prices).
- Taxation: The "One Big Beautiful Bill Act" (OBBBA) signed in July 2025 introduced changes to U.S. taxation of non-U.S. income, though the company assessed the impact as not material for the period.
Investor Verification Checklist
- China Exposure: Verify the sustainability of the 37% revenue concentration in China amidst evolving U.S. export controls and potential retaliatory measures.
- Deferred Revenue: Monitor the deferred revenue balance ($2.22 billion), which serves as a leading indicator for future bookings and revenue recognition.
- Capital Expenditures: Review the $778 million in YTD capital expenditures to ensure capacity expansion aligns with the projected AI-driven demand.
- Share Count: Confirm the impact of the aggressive share repurchase program ($3.6 billion YTD) on earnings per share dilution/accretion.
- Margin Sustainability: Assess whether the 49.8% gross margin is sustainable given potential tariff-related costs and supply chain inflation mentioned in the risk factors.