tapebrief
LRCX · Q1 2026

LRCX · Q2 2026 Earnings

Bullish

Lam Research

Reported January 28, 2026

30-second summary

Lam delivered $5.34B of revenue (+22.1% YoY, +0.4% QoQ) with non-GAAP EPS of $1.27, gross margin of 49.7%, and operating margin of 34.3% — all above the December guide ranges that had embedded a 210bps gross-margin step-down. The forward setup is the bigger signal: March guided to $5.70B midpoint (+9.6% QoQ) with EPS of $1.35, and Archer put a number on CY2026 WFE at ~$135B (vs. ~$110B in CY2025) plus advanced packaging growing >40%. The bear case from last quarter — that the December margin cut signalled structural reset — did not hold; this is one quarter of acceleration heading into a year management is now openly framing as exceeding their own one-year-old investor-day plan.

Headline numbers

EPS

Q2 FY2026

$1.27

Revenue

Q2 FY2026

$5.34B

+22.1% YoY

Gross margin

Q2 FY2026

49.6%

Free cash flow

Q2 FY2026

$1.22B

Operating margin

Q2 FY2026

33.9%

Key financials

Q2 FY2026
MetricQ2 FY2026Q2 FY2025YoYQ1 FY2026QoQ
Revenue$5.34B$5.17B+3.3%$5.32B+0.4%
EPS$1.27$1.33-4.5%$1.26+0.8%
Gross margin49.6%50.1%-50bps50.4%-80bps
Operating margin33.9%33.7%+20bps34.4%-50bps
Free cash flow$1.22B$2.38B-48.7%$1.59B-23.3%

Guidance

Lam beat on Q2 revenue, EPS, and margins; now guides Q3 FY2026 with modest sequential growth in revenue and EPS, reflecting confidence in second-half 2026 momentum driven by DRAM and foundry logic.

Guidance is issued for both next quarter and the full year. Both may appear below.

Actuals vs prior guidance

MetricPeriodPrior guideActualΔResult
RevenueQ2 FY2026$5.20B +/- $0.30B ($4.90B–$5.50B)$5.34B+$0.14B above guide high endBeat
Non-GAAP EPSQ2 FY2026$1.15 +/- $0.10 ($1.05–$1.25)$1.27+$0.02 above guide high endBeat
Gross margin as % of revenueQ2 FY202648.5% +/- 1% (47.5%–49.5%)49.6%+1.1 ppts above guide high endBeat
Operating margin as % of revenueQ2 FY202633.0% +/- 1% (32.0%–34.0%)33.9%+0.9 ppts above guide high endBeat

New guidance

MetricPeriodGuideYoY
RevenueQ3 FY2026$5.70B +/- $0.30B ($5.40B–$6.00B)—
Non-GAAP EPSQ3 FY2026$1.35 +/- $0.10 ($1.25–$1.45)—
Gross margin as % of revenueQ3 FY202649.0% +/- 1% (48.0%–50.0%)—
Operating margin as % of revenueQ3 FY202634.0% +/- 1% (33.0%–35.0%)—

Segment performance

Q2 FY2026
SegmentQ2 FY2026Q2 FY2025YoY
Systems revenue$3.36B$3.44B-2.3%
Customer support-related revenue and other$1.99B$1.73B+15.0%

Capacity & utilization

Q2 FY2026
SegmentQ2 FY2026Q2 FY2025YoY
Deferred revenue$2.25 billion$2.68 billion—
Operating cash flow$1.48 billion——

Profitability

Q2 FY2026
SegmentQ2 FY2026Q2 FY2025YoY
Non-GAAP gross margin49.7%50.3%—
Non-GAAP operating margin34.3%34.4%—

Management tone

Q4 FY2025 "deposition and etch criticality in the AI era" → Q1 FY2026 "AI-driven SAM expansion with tariff/China headwinds" → Q2 FY2026 "growth is exceeding our own investor-day plan, scale faster."

The single most important sentence on the call was Archer's: "The growth we envisioned for LAM at our investor event one year ago is materializing faster than we anticipated." Lam has historically been a measured capital-equipment company; this is the first time in three quarters of coverage that management has openly acknowledged exceeding their own internal plan. The framing migrated from positioning (Q4 FY2025) to dollar-denominated opportunity (Q1 FY2026) to "we are behind our own demand curve" (this quarter), and the operational consequence — accelerated manufacturing footprint expansion — is now explicit rather than aspirational.

The WFE framing also tightened. Last quarter Archer described CY2026 as "robust setup…somewhat second half weighted" with no number. This quarter the number arrived: $135B vs. ~$110B in CY2025, a +23% market move that brackets the high end of analyst expectations. In Q&A with UBS, management refused to quantify the cleanroom-constraint gap (some analysts had implied $150B of underlying demand vs. the $135B guide) — that refusal is itself a tell that 2027 is being set up as another step-up year, not a peak.

China commentary inverted again. Last quarter China was 43% of revenue and management guided <30% for CY2026 with a candid "I don't see where that's going to come from next year." This quarter China printed at 35% — already stepping down — and Archer narrowed the CY2026 estimate to "low 30s or high 20s." The cliff management telegraphed is now visible in the print, and the language is more concrete: flattish China WFE plus growth elsewhere drives the percentage down.

NAND moved from "$40B upgrade cycle accelerating, capacity may be needed sooner" to a harder claim in Q&A: "demand is growing faster than previously expected as new use cases for high-capacity SSDs emerge" with "non-volatile context memory layers that enable large-scale AI inference [creating] incremental growth in NAND bit demand." Archer also flagged a major customer announcing a NAND-heavy FAB — the first concrete greenfield NAND signal in this cycle, answering the prior watch directly.

The advanced-packaging tone is the most upgraded line item. Last quarter packaging was "mid-single-digit % of foundry logic spend, moving higher." This quarter it's "advanced packaging business expected to grow more than 40% in 2026, outperforming our view of WFE growth." That is the language of a segment that has been re-categorized in management's internal model from optionality to plan.

Recurring themes management leaned on this quarter:

AI transformation accelerating semiconductor demand beyond initial forecastsGate-all-around transistor transition creating $1B+ LAM-FAM opportunity per 100k monthly wafer startsAdvanced packaging growth outpacing WFE, driven by HBM and mobile integrationACARA edge system gaining significant share with 2x installed base growth and expanded node applicationsSupply chain constraints (clean room space) creating undersupply environment favoring equipment vendorsOperating leverage delivery across gross margin, operating margin, and EPS year-over-year

Risks management surfaced:

Clean room space shortage constraining WFE growth despite strong demandCustomer mix variability impacting gross margin (e.g., September to December sequential decline)Geopolitical regulations affecting shipping timing (China affiliate rule updates noted)Dependence on continued DRAM, Foundry Logic, and HBM adoption of advanced node technologiesCustomer advance payment volatility affecting deferred revenue ($500M reduction noted)

Q&A highlights

Tim Curry · UBS

How much WFE constraint is caused by FAB readiness issues? If using normal WFE intensity, implied WFE could reach $150B vs. guidance of $135B, suggesting ~$15B in constraints.

Management declined to quantify the constraint amount, citing fluid plans as customers work to bring facilities online. However, they indicated 2027 should be a strong year given current supply constraints and multi-year agreements reflecting strong demand.

WFE guidance: $135B for current yearFAB announcements represent capacity in 2027, 2028 and beyondConstraints expected to continue until new FABs openIndustry sold out for most products; multi-year agreements in place

Atif Malik · Citi

On NAND market dynamics: why was NAND down sequentially while DRAM was up? Are NAND makers slowing tech migrations to maximize profitability given supply shortages? When will new NAND capacity come online?

NAND played out as expected; 2026 will be a growth year. Customers are prioritizing DRAM over NAND due to better profitability, but major NAND-focused FAB announcements are coming online in 2026. The $40B upgrade opportunity is happening faster than originally expected. Upgrades will precede real capacity additions, with combination of both occurring.

2026 expected to be a NAND growth yearDRAM prioritized over NAND due to superior profitabilityMajor customer announced new FAB dedicated/heavily emphasizing NAND$40B addressable opportunity happening quicker than previously expected

Vivek Ira · Bank of America Securities

Regarding WFE growth of 23%: does management expect to maintain or gain share? What are the puts and takes by market segment? What is the China WFE assumption?

Management plans to increase share again this year, driven by accelerating technology transitions that increase deposition and etch intensity. New product launches (conductor edge, dielectric edge, MOLLE, dry resistance, advanced packaging, backside power to come) support share gains. China expected to be flattish year-over-year, becoming a smaller percentage of total revenue as rest of technology-driven business grows.

Plan to gain share at successive technology nodes; share gains driven by new productsTechnology transitions accelerating, driving higher deposition/etch intensityNew products: MOLLE, dry resistance gaining traction; backside power comingChina expected flattish year-over-year; declining as percentage of total revenue

Stacy Rasgon · Bernstein Research

On China: was the flattish guidance a market (WFE) statement or a LAM revenue statement? Will China percentage decline below the 30% threshold previously mentioned?

The flattish comment refers to WFE in China (market statement), not LAM revenue. China percentage expected to decline as rest of market grows. Management estimated China percentage likely in low 30s or high 20s range, with precise number dependent on growth from outside China.

China WFE expected flattish 2025-2026China percentage of LAM revenue expected to declineEstimated range: low 30s or high 20s (vs. prior 30% threshold discussion)Outcome modulated by growth outside China

CJ Muse · Canterfix

On CSBG services segment: the uplift seen in December and continuing into March—will it sustain throughout the year or pause as customer focus shifts to greenfield investments? How should we model CSBG growth?

Management emphasized CSBG growth is driven by both near-term customer actions to maximize tool output and longer-term transformation of service business toward equipment intelligence and predictive maintenance. Both approaches drive top-line and margin improvement. Expected to grow at high single-digit to low double-digit rates, consistent with prior investor day guidance. December strength was partly lumpy reliance systems piece; overall CSBG continues steady growth.

CSBG growth drivers: customer near-term output maximization + transformation to predictive maintenance and automated maintenance cobotsBoth drivers provide margin profitability improvementExpected growth: high single-digit to low double-digit (consistent with investor day)December quarter had elevated reliance systems (potentially lumpy)

Answers to last quarter's watch list

December gross margin vs. the 48.5% ±1% guide — Printed at 49.7%, +120bps above the midpoint and +20bps above the 49.5% high end. The tariff/mix step-down management framed last quarter did not materialize at the guided magnitude.
Resolved positively
December operating margin vs. 33.0% ±1% — Printed at 34.3%, +130bps above the midpoint. Opex flexed as guided; the bear case for a structural margin reset is off the table.
Resolved positively
China revenue mix sequential trajectory — China printed at $1.87B / 35% of revenue, down from $2.29B / 43% last quarter. The step-down began this quarter rather than waiting for back-half CY2026, and Archer narrowed the CY2026 destination to "low 30s or high 20s.".
Resolved positively
CY2026 framing on the December call — Management put a number on CY2026 WFE at ~$135B (+23% vs. CY2025 ~$110B) and quantified advanced packaging at >40% growth, DRAM and Leading Edge Foundry Logic as the growth leaders, and NAND as a growth year. The bridge — non-China multinationals more than offsetting China — is now backed by a $135B market number, though precise segment dollars were not given.
Resolved positively
Deferred revenue and Japan-pending balance — Total deferred fell to $2.25B from $2.77B (-$520M QoQ). Management attributed the decline to customer advance payment volatility (~$500M reduction). The Japan-pending sub-balance was not separately disclosed in the press release. The signal is muddier than last quarter; the headline decline could reflect timing or could reflect a softer forward-systems book.
Continue monitoring
NAND capacity vs. upgrade split commentary — Archer disclosed in Q&A that "a major customer announced a new FAB dedicated/heavily emphasizing NAND" and that NAND demand is "growing faster than previously expected" with new AI-inference use cases adding to bit demand. This is the first concrete NAND greenfield signal in this cycle.
Resolved positively

What to watch into next quarter

March revenue vs. the $5.70B ±$300M guide: the midpoint implies +6.7% QoQ off a beat, which is the most aggressive sequential implied step-up in three quarters. Watch whether the print lands at or above the midpoint — anything below $5.50B raises the question of whether the $135B CY2026 WFE call is front-loaded or whether second-half weighting is more pronounced than implied.

March gross margin vs. 49.0% ±1%: the guide sits 70bps below the Q2 actual. Watch whether the print holds 49%+ (consistent with the structurally-elevated-margin thesis) or slips to the 48% low end (mix headwind reasserting).

Deferred revenue trajectory: $2.25B is down $520M QoQ, attributed to customer advance payment timing. Watch whether the balance rebuilds in March (consistent with strong forward systems book) or continues to decline (would soften the bullish 2H CY2026 narrative).

China as % of revenue stepping toward "low 30s or high 20s": Q2 already moved to 35% from 43%. Watch whether March prints below 33% — that would put the cliff ahead of management's own CY2026 framing and validate the non-China offset claim faster than expected.

Advanced packaging quantification: management put +40% growth on this segment for CY2026 but has not yet disclosed an absolute dollar base. Watch the March call for any sizing of the packaging business or a sub-segment breakout — that would be the next concrete TAM disclosure.

2027 setup commentary: management implied 2027 is being structured as another strong year via multi-year customer agreements and sold-out product lines. Watch for any quantification of the 2027 bridge (FAB completion timing, capacity-add tranches) on the March call.

Sources

  1. Lam Research Q2 FY2026 earnings press release (period ended December 28, 2025), filed with the SEC: https://www.sec.gov/Archives/edgar/data/707549/000070754926000006/lrcx_exhibitx991xq2x2026.htm
  2. Lam Research Q2 FY2026 earnings call commentary (management prepared remarks and Q&A excerpts).
  3. Tapebrief Q1 FY2026 brief (LRCX, reported 2025-10-22) for cross-quarter comparison.
  4. Tapebrief Q4 FY2025 brief (LRCX, reported 2025-07-30) for cross-quarter comparison.

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