Lam Research raised again after strong results, with the WFE upcycle supporting the Buy rating

Overview

This report is Deutsche Bank's commentary on Lam Research Corporation's F3Q26 (March quarter) results. The report title emphasizes "Strong gets stronger," with the core view that LRCX delivered a solid beat and higher guidance even against elevated expectations, further reinforcing a bullish view on the semiconductor wafer fab equipment spending cycle.

Core views

Deutsche Bank believes the positives this quarter clearly outweighed the negatives. LRCX not only benefited from industry-wide WFE expansion, but also executed well in company-specific areas such as share gains at new nodes, NAND upgrades, advanced packaging, and installed base sales/upgrades. Management raised its 2026 WFE outlook from about $135bn to about $140bn and indicated that growth could remain strong in 2027 after new clean-room capacity comes online.

Analysis framework

The report uses results comparison, next-quarter guidance, revisions to Deutsche Bank's old and new forecasts, business and end-market mix, valuation multiples, and risk scenarios as its main analytical framework. For valuation, it applies approximately 35x CY27E EPS and, combined with fundamental momentum, the potential for positive revisions, management conservatism, and valuation expansion in the semiconductor sector, supports a valuation above the historical average.

Methodology notes

• Earnings reviewActual versus expectations comparison

  beat and raise

  Compare revenue, gross margin, and Non-GAAP EPS against Deutsche Bank estimates, consensus expectations, and the company's prior guidance, and assess how much the new guidance lifts future forecasts.

• Industry cycleWFE demand outlook

  wafer fab equipment cycle

  Use the company's commentary on 2026 and 2027 WFE growth to judge the strength and sustainability of the semiconductor equipment cycle.

• Valuation methodsForward P/E valuation

  35x CY27E EPS

  The $325 target price is based on approximately 35x CY27E EPS of $9.30, significantly above the company's roughly 18x historical two-year forward P/E average.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• LRCX.OQ / Lam Research Corporation

  The report's covered name; maintains a Buy rating and raises the target price.

  Strengths

  Both results and guidance were stronger than expected; the 2026 WFE outlook was raised; NAND upgrade spending is being pulled forward; the advanced packaging business growth outlook was raised from above 40% to above 50%; SAM as a share of WFE is expected to exceed the mid-30% range.

  Weaknesses

  Clean-room constraints still limit stronger revenue growth; opex rose 5% q/q in the March quarter, and R&D investment will continue to increase.

  Comparison

  F3Q26 revenue, gross margin, and EPS were all above Deutsche Bank and market expectations; F4Q26 guidance was revised upward by about 8% versus prior market expectations.

  Risks

  A slowdown in equipment spending, volatility in NAND WFE, weaker macro demand, tighter export controls, and market share loss.

Key data

• Report date2026-04-23The body of the report shows the date as 23 April 2026.
• Current price$265.55As of 2026-04-22.
• Target price$325.00Raised from the prior $300.
• F3Q26 revenue$5.841bnAbove the market expectation of $5.751bn and Deutsche Bank's estimate of $5.800bn.
• F3Q26 Non-GAAP EPS$1.47Above Deutsche Bank's estimate of $1.38, the market expectation of $1.37, and the midpoint of the company's prior guidance.
• F4Q26 revenue guidance$6.60bn ± $400mnThe guidance midpoint implies about 13% growth versus the prior quarter and is above prior Deutsche Bank and market expectations.
• F4Q26 Non-GAAP EPS guidance$1.65 ± $0.15Above prior Deutsche Bank and market expectations of $1.47 and $1.46, respectively.
• 2026 WFE outlookapproximately $140bn, approximately +27% y/yThe company's prior expectation was about $135bn.
• CY26E EPS$6.78Raised from $6.40.
• CY27E EPS$9.30Raised from $8.45.

Impact & implications

The report has positive investment implications for LRCX: supported by the combined drivers of a WFE upcycle, accelerating NAND upgrades, growth in advanced packaging revenue, and expanding SAM share, earnings forecasts still have room for further upward revision. Although valuation is already above the historical average, Deutsche Bank believes strong execution and a strong financial model are sufficient to justify a premium.

Risks

• A slowdown in the pace of equipment spending, especially with volatility in NAND WFE spending.
• A weaker macroeconomy could affect end-market chip demand.
• Additional export restrictions or regulatory changes could affect the company's sales.
• Clean-room capacity constraints in the semiconductor equipment industry could limit the pace of revenue realization.
• If competition intensifies or execution falls short of expectations, LRCX could lose market share.
• The valuation multiple above the historical average requires continued earnings upgrades for support.

What to watch

• Whether 2026 WFE reaches or exceeds the company's outlook of about $140bn.
• After new clean-room capacity comes online in 2027, whether WFE growth can continue to accelerate.
• Whether most of the roughly $40bn incremental revenue opportunity related to NAND upgrades can be realized by the end of 2027.
• Whether the advanced packaging business can achieve revenue growth of more than 50% in CY26.
• Whether SAM as a share of WFE can rise further from the mid-30% range and approach the long-term high-30% target.
• Whether F4Q26 revenue, gross margin, and EPS guidance are delivered.