Lam Research projects resilient revenue in 2026 despite drop from China; analysts up estimates

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Lam Research (NASDAQ:LRCX [https://seekingalpha.com/symbol/LRCX]) expects revenue to remain resilient in 2026 despite a significant reduction in sales to China, prompting positive feedback and higher EPS estimates from most financial firms.

The wafer fabrication equipment company's first-quarter financial results [https://seekingalpha.com/news/4507053-lam-research-ticks-up-after-q1-results-outlook-top-expectations] and outlook topped estimates despite a $200M headwind for the quarter in progress related to restrictions from the U.S. Department of Commerce's Bureau of Industry and Security.

"To this end, we now model CY25 EPS of $4.80 vs. consensus coming in of $4.60," said Cantor analysts, led by C.J. Muse, in an investor note. "Moving to 2026, mgmt highlighted a vision for a 'Robust Setup' for CY26 WFE led by AI-related demand driving uplift across Foundry/Logic, NAND, and DRAM (and this comes despite $600M BIS headwind and vision for China to normalize to ~30% of revs)."

China accounted for 43% of revenue during the quarter ended in September.

Cantor reiterated its Overweight rating and $170 price target on the stock.

"In turn, we model Lam's EPS tracking to $5.50 in CY26 (cons $4.70) and continue to see potential for stretch goal of $6.00-6.50 when all is said and done (note mgmt discussed 1HCY26 tracking inline to modestly above 2HCY25 with CY26 revenues more 2H weighted)," Muse said.

Similarly, Needham reiterated its Buy rating and increased its price target to $160 from $150.

"While China is expected to decline in CY26, management sees a robust setup for ex-China outperformance due to the strength of all WFE segments, including continued NAND upgrades," said Needham analysts Charles Shi and Denis Pyatchanin, in a Thursday investor note.

Needham increased its full-year 2026 EPS estimate to $4.82 from $4.46.

"Net, LRCX expects to outperform ex-China WFE in CY26, while China could represent a headwind," Shi added.

Meanwhile, KenBanc maintained its Sector Weight rating and increased its full-year 2026 EPS estimate to $5.01 from $4.63. However, they expect to see headwinds to gross margin due to customer mix and tariff normalization.

"We continue to think LRCX is well positioned to benefit from current trends and increasing deposition and etch intensity for AI-related devices, leading edge roadmaps, and an improving memory cycle to include NAND upgrades and DRAM capacity expansion," said KeyBanc analysts, led by Steve Barger, in an investment note.

"That said, we think the aforementioned gross margin and tax headwinds suggest EPS growth will decelerate to single digits," he added. "We are impressed with LRCX as a company, but at current valuation, less so as an investment."

Lam Research shares initially increased following the release of the financial results but declined following the earnings call. Shares were down 4% during early Thursday trading. Fellow WFE companies had dropped as well. Applied Materials (AMAT [https://seekingalpha.com/symbol/AMAT]) and ASML Holding (ASML [https://seekingalpha.com/symbol/ASML]) had both inched 1% lower.

Still, Lam Research shares have surged nearly 100% year to date.

MORE ON LAM RESEARCH

* Lam Research Corporation (LRCX) Q1 2026 Earnings Call Transcript [https://seekingalpha.com/article/4832122-lam-research-corporation-lrcx-q1-2026-earnings-call-transcript]
* Lam Research Corporation 2026 Q1 - Results - Earnings Call Presentation [https://seekingalpha.com/article/4832168-lam-research-corporation-2026-q1-results-earnings-call-presentation]
* Applied Materials Vs Lam Research: Battle Of Semicon Equipment Leaders [https://seekingalpha.com/article/4831811-applied-materials-vs-lam-research-battle-of-semicon-equipment-leaders]
* Lam Research anticipates China revenue below 30% in 2026 as AI drives record $5B+ quarters [https://seekingalpha.com/news/4507247-lam-research-anticipates-china-revenue-below-30-percent-in-2026-as-ai-drives-record-5b]
* Lam Research ticks up after Q1 results, outlook top expectations [https://seekingalpha.com/news/4507053-lam-research-ticks-up-after-q1-results-outlook-top-expectations]