According to Zhitong Financial News, Goldman Sachs released a research report stating that, with earnings and guidance both meeting expectations and 12
Despite relatively high investor expectations amid supply chain shortages, Lam Research (LRCX.US) stock is expected to decline slightly after earnings. Goldman Sachs maintains a "Buy" rating on Lam Research with a price target of $380.
However, the report also noted that investors' positions prior to the earnings report remained relatively long, reflecting a more optimistic outlook on the industry's upward cycle—potentially 10 by 2027.
A new Tier-1 wafer fab has come online. Goldman Sachs was encouraged by management’s preliminary outlook for wafer fabrication equipment (WFE) spending exceeding $200 billion by 2027, driven by
DRAM leads, followed by advanced foundry/logic and NAND; Goldman Sachs expects this figure to be further revised upward over the next several quarters.
There are four reasons to maintain a buy rating: Lam Research has significant exposure in deposition and etch processes related to gate-all-around (GAA) and backside power delivery, DRAM market share continues to rise, NAND equipment upgrade business represents a solid portion of revenue, and
WFE visibility improves in 2027 and beyond. Additionally, Goldman Sachs believes Lam's accelerated buyback program signals management's confidence that the stock has upside potential from current levels.
Transmission within the coverage: Goldman Sachs expects Applied Materials (AMAT.US) to initially react slightly negatively due to similar end-market exposure to Lam Research. This is an inference based on peers' stock reactions, not a rating change for Applied Materials.
Q3: Overall in line with expectations, strong system business, weak service business.
Lam Research's third-quarter revenue was $8.219 billion, slightly above Goldman Sachs' estimate of $8.207 billion and Street's estimate of $8.181 billion; up 22.3% quarter-over-quarter and up
54.4%. Breaking it down, the structure is uneven: system revenue amounted to RMB 5.733 billion, 6.9% higher than Goldman Sachs and 2.7% higher than Street estimates; while service business (CSBG, Client Support Business Group) revenue
$2.487 billion, below Goldman Sachs by 12.5% and below the Street by 0.9%, was the primary source of the variance.
Gross margin of 52.4%, 16 basis points below Goldman Sachs and 22 basis points above Street; operating margin of 40.2%; non-GAAP EPS of $2.20
USD, below Goldman Sachs' $2.25 and slightly below the Street's $2.21.
According to the research report, system and service revenues in the third quarter accounted for approximately 70% and 30% of the company’s total revenue, respectively, with service revenue falling 12.5% below Goldman Sachs’ forecast—the largest deviation among all revenue components in this earnings structure.
Q4 guidance: In line with Street, but below Goldman Sachs
The company guided for a median Q4 revenue of $8.6 billion (range: $8.2 billion–$9.0 billion), below Goldman Sachs' estimate of $8.867 billion and in line with Street's expectation of $8.617 billion; corresponding环比
4.6%–8.0%, year-over-year growth of 60.9%–65.9%.
Gross margin guidance is approximately 52.5% (Goldman Sachs: 52.7%, Street: 52.1%); operating margin guidance is 40.5%, closely aligned with Goldman Sachs’ 40.7% and above Street’s
39.9%; Non-GAAP EPS guidance of $2.18–$2.48, midpoint of $2.33, below Goldman Sachs' $2.47 and in line with Street's $2.34
Dollar consistency.
Maximum increase: The preliminary WFE outlook for 2027 exceeds $200 billion.
Lam Research raised its 2026 WFE growth outlook to the mid-range of $150 billion and provided an initial projection for 2027 WFE to exceed $200 billion (an increase of approximately
30%), with DRAM expected to lead, followed by foundry/logic and NAND. Management remains optimistic about the 2027 WFE landscape, citing the anticipated deployment of 10
A new primary wafer fab has come online.
Rising chip complexity continues to expand Lam's addressable market: GAA and backside power delivery increase process intensity, DRAM process transitions support market share growth, and NAND technology upgrades benefit upgrade and retrofit businesses. Goldman Sachs has not provided
The breakdown of WFE's digital figures for 2027 by product category only indicates the order of growth.
Gross margin trajectory and service business: The 50% target remains unchanged.
Despite the decline in revenue from the Chinese market, the company forecasts a gross margin of approximately 52.5% for the fourth quarter. Management reaffirmed its guidance for achieving a mid-50% gross margin range in the medium term (approximately
55% confidence, supported by factors including pricing, product differentiation, scale efficiency, reliability, and localized manufacturing.
In terms of service business, Lam expects CSBG revenue to grow by more than 30% in CY26 and by more than 15% in CY27. AI-driven capacity demand is accelerating Equipment
The adoption of Intelligence and Dextro has doubled the scale of predictive maintenance automation since 2026, with deployment expanding from NAND to DRAM.
Valuation and Target Price
Goldman Sachs' $380 price target is based on a 35x P/E multiple applied to a normalized EPS of $10.75. The three scenarios are: Base case—$10.75 × 35 = $380
USD (45.7% above current price); Bull case: $12.36 × 35 = $433 (66.0% upside); Bear case: $9.14 × 25 = $228
USD (down 12.6%). Combined with a 0.4% dividend yield, the potential total return is 46.1%.
As of the closing price on October 21, the company's market capitalization is $327.9 billion, and its enterprise value is $320.1 billion, with an average daily trading volume of approximately $2.8 billion over the past three months. Notably, 380
The target price for USD has not been adjusted since July 5, 2026, while the stock price has declined from $351.41 at that time to $260.81, widening the apparent upside potential to
45.7%.
The target price history attached to the research report shows that Goldman Sachs has consistently raised its target price for Lam Research over the past two years: $85 in January 2025, $115 in July, and $160 in October.
USD: $180 on January 9, 2026; $262 on January 29, 2026; $290 on April 23, 2026; rising to $380 on July 5, 2026.
USD. The corresponding closing prices during the same period were $74.65, $101.06, $142.54, $218.36, $248.17, $258.56, and $351.41.
In other words, the $380 price target has remained unchanged since July 5, while the stock price has declined from $351.41 at that time to $260.81 on October 21.
USD, with a range decline of approximately 26%. It is this discrepancy that expands the potential upside on paper to 45.7%, rather than the target price being raised.
Goldman Sachs's key downside risks include: (1) weakening demand for DRAM/HBM; (2) delays in planned cleanroom and fab expansions; (3) advanced packaging and 3D
The architecture-driven increase in single-machine capacity fell short of expectations. All three are risk warnings rather than actual negative changes, and are unrelated to "2027 WFE exceeding $2,000.
The baseline scenario of "hundreds of millions of U.S. dollars" coexists; when citing, do not write that Goldman Sachs has lowered its industry assessment.