Lam Research Corporation Q3 FY2026 earnings call

LAM started 2026 solidly with revenues and profitability in the March quarter at the upper end of guidance ranges. Guidance for the June quarter shows strong momentum in an AI-driven semiconductor demand environment. WFE was updated to $140 billion with an upside bias. AI-driven demand drives higher deposition and edge intensity. In NAND, AI transformation is moving into the storage layer with conversion spending pulled forward. In DRAM, industry is transitioning to 1C generation devices and LAM's Striker carbide solution is benefiting. Foundry logic had a record year in 2025 and continues to capture leading edge opportunities. Customer support business group had strong demand in spares, upgrades, and services, with services business growing mid-teens over December quarter, new agreements for equipment intelligence services, and Dextro cobots expanding coverage and being upgraded.

In the March 2026 quarter, LAM had revenues at record levels. The customer support business group delivered its first $2 billion-plus revenue quarter. For systems revenue: Foundry accounted for 54% in March 2026, down from 59% in December, flat sequentially in dollar terms and up 35% year over year. Memory was 39% of systems revenue, up from 34% in December, with record DRAM revenue accounting for 27% of systems revenue, up from 23% in December. Non-volatile memory contributed 12% of systems revenue, slightly up from 11% in December. The logic and other segment was 7% of systems revenue in March. The customer support business group generated a record $2.1 billion in revenue in the March quarter, up 6% sequentially and 25% from the same period in 2025.

For the June 2026 quarter, expected revenue of $6.6 billion plus or minus $400 million, gross margin of 50.5% plus or minus one percentage point, operating margins of 36.5% plus or minus 1 percentage point, and record earnings per share of $1.65 plus or minus 15 cents. WFE was updated from $135 billion range to $140 billion with an upside bias and 2027 WFE expected to continue growing.

Risks include industry constraints, customer spending changes, supply chain issues, and potential technical innovation not meeting expectations that could impact business performance.

Q: Timothy Arcuri with UBS asked about gross margin and capacity.

A: Doug and Tim responded on gross margin being due to customer and product mix, factory efficiencies, tool maturity, and guidance for margin levels going forward.

Q: CJ Muse with Cantor Fitzgerald asked about 2027 visibility and supply chain readiness.

A: Tim responded on having conversations with customers about 2027, preparing supply chain and capabilities.

Q: Harlan Sir with JP Morgan asked about enhancements to install base for productivity and monetization.

A: Tim responded on equipment intelligence, Dextro Cobot benefits, and monetization through services and new tool sales.

Q: Lateef Malik with Citi asked about NAND market changes.

A: Tim responded on increased demand for NAND from AI data centers, conversion spending pull forward, and need for greenfield capacity.

Q: Melissa Weathers with Dosha Bank asked about memory cycle difference and de-risking.

A: Tim responded on memory cycle being different with more 3D scaling opportunities for LAM and operational investments for flexibility.

Q: Serini Pajori with RBC Capital Markets asked about China demand environment.

A: Doug responded on China revenue percentage down due to smaller customers and broader multinational spending in China.

Q: Bhavik Ara from Bank of America asked about memory customers' long-term contracts and pricing power.

A: Tim responded on longer visibility from long-term contracts and financial benefit from them.

Q: Jim Schneider with Goldman Sachs asked about WFE uptick leverage.

A: Doug responded on everything being stronger due to more clean room availability.

Q: Stacy Rasgon asked about services growth and WFE sequential growth.

A: Doug and Tim responded on services growth drivers and belief in WFE growth next year.

Q: Chris Sankar with TD Cowan asked about WFE number drivers and PECVD share gain.

A: Doug responded on all components better due to more clean room and PECVD benefit from advanced packaging.

Q: Joe Quattrochi with Wells Fargo asked about lead times and Malaysia factory.

A: Joe responded on lead times stretching and Malaysia factory ramp in second half of year.

Q: Vijay Rakesh with Mizzou asked about DRAM HBM uplift.

A: Doug and Tim responded on HBM requiring more equipment but no specific dollar per 10K numbers provided.