Lam Research shares dropped 7.3% to $241.75 in premarket trading before Thursday's opening. The decline erased about $24 billion from Lam's market value. A closing price of $241.75 would be the lowest since early April and about 44% below the June 30 record. Lam has lost roughly $240 billion in market value from that peak in less than four months.
Lam delivered a fifth consecutive record quarter, with sales increasing 54%. September-quarter revenue totaled $8.22 billion, exceeding the $8.13 billion consensus cited by Cantor Fitzgerald. Adjusted earnings reached $2.20 per share, compared with expectations of $2.18. Gross margin reached a record 52.4%. Operating margin exceeded 40% for the first time. Lam generated record free cash flow of $3.24 billion. Lam increased the quarterly dividend by 27% to 33 cents.
Lam projected December-quarter revenue of $8.6 billion, plus or minus $400 million, slightly exceeding consensus of $8.55 billion. Cantor said some investors had discussed revenue of $8.9 billion, a level Cantor considered impossible. The guidance was about $300 million below those bullish expectations. An analyst on Wednesday's earnings call estimated that component shortages accounted for $300 million to $400 million. Chief Financial Officer Doug Bettinger would not confirm that estimate but said December shipments facing delays would instead occur in March.
Chief Executive Tim Archer said demand at some suppliers was increasing faster than Lam's business. Archer said, "I think we'll be caught up very shortly." Cantor analyst C.J. Muse argued that supply, rather than demand, currently limits Lam's sales. China accounted for 35% of September revenue. Management expects China's share to decline significantly in December because domestic customers in China are reducing spending.
Lam's preliminary forecast puts 2027 spending on wafer fab equipment at $200 billion, versus about $155 billion this year, representing roughly 30% growth. Ten major new chip plants are due to begin operating through 2027. Management characterized the forecast as an initial estimate constrained by supply. Cantor forecasts $215 billion in 2027 wafer fab equipment spending. Cantor said checks in lithography indicated spending could reach $225 billion. Cantor expects Lam's tool business to grow about 50% in 2026, compared with roughly 40% for the industry.
Muse maintained an Overweight rating and a $500 price target in a Thursday note, about 92% above Wednesday's closing price. The $500 target is the highest among recent analyst actions tracked by Benzinga. Cantor retained Lam on the firm's "Top Pick" list. Muse said Lam exceeded September-quarter expectations, but December guidance below more bullish expectations explained the sell-off. Cantor increased the firm's 2027 earnings estimate from $10.25 to $10.75 per share. Lam's premarket price represents about 22.5 times that earnings estimate.
Needham maintained a Buy rating on Thursday but lowered the firm's target from $390 to $290, the lowest among recent analyst calls. Mizuho reduced the firm's target from $365 to $360. Evercore ISI lowered the firm's target from $355 to $315 on Monday. Benzinga Analyst Ratings shows 20 analysts assigning Buy ratings and one assigning a Hold rating among 21 analysts covering Lam. The analysts' average target of $350 implies about 45% upside from the premarket price.
Applied Materials fell 4.8% before the opening amid selling across the sector, a day after SpaceX results prompted a semiconductor rebound. KLA declined 4.1% before the opening. The iShares Semiconductor ETF (SOXX) lost 3.5% before the opening.
Lam Research Shares Drop 7.3% Amid Missed Guidance and Analyst Target Cuts
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Summary
Lam Research (NASDAQ:LRCX) shares dropped 7.3% to $241.75 in premarket trading on October 22, 2026, as the fear and greed index shifted toward caution. The stock lost about $24 billion in market value after the company issued weaker-than-expected guidance for the December quarter. Lam reported a record $8.22 billion in revenue for the September quarter, but its $8.6 billion forecast for the next quarter disappointed some investors. Analysts from Cantor Fitzgerald and others cut price targets, with Benzinga tracking 20 Buy ratings and one Hold among 21 analysts. Altcoins to watch may gain attention as the broader semiconductor sector also declined, with Applied Materials and KLA down 4.8% and 4.1%, respectively.
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