Lam Research (LRCX, Financial) just delivered a strong quarter, with $4.17 billion in revenue marking an 8% increase, boosted by improved margins and a ten-for-one stock split that made the shares more accessible. CEO Tim Archer emphasized that Lam's investments in technology are setting the stage for WFE growth outperformance in 2025, despite ongoing challenges. However, the company's exposure to China remains a sticking point, as analysts are wary about how continued export restrictions and declining revenue contribution from the region might weigh on the company's prospects.
Lam's momentum is driven by demand for advanced equipment essential for next-generation semiconductors, particularly in etch and deposition processes. Analysts pointed to solid investment trends from memory players like Micron (MU, Financial) and SK Hynix (HXSCF, Financial), but cautioned that Samsung's (SSNLF, Financial) sluggish spending and a slow NAND recovery could limit upside potential. While Lam painted a more optimistic picture for NAND, geopolitical tensions surrounding U.S.-China relations kept uncertainty in the mix, casting a shadow over investor sentiment.
Looking forward, Lam's Q4 guidance targets $4.3 billion in revenue with stable margins. Analysts are split on the company's ability to weather the storm as China's share of revenue is expected to dip from 37% to 30%. Yet, some see opportunity in Lam's strategic pivots beyond China, betting that its focus on capturing growth in other regions will help soften the blow from the geopolitical headwinds and regulatory hurdles ahead.
