Semiconductor equipment maker Lam Research (NASDAQ:LRCX) reported Q1 CY2025 results topping the market’s revenue expectations , with sales up 24.4% year on year to $4.72 billion. The company expects next quarter’s revenue to be around $5 billion, close to analysts’ estimates. Its non-GAAP profit of $1.04 per share was 3.8% above analysts’ consensus estimates.
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Revenue: $4.72 billion vs analyst estimates of $4.64 billion (24.4% year-on-year growth, 1.7% beat)
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Adjusted EPS: $1.04 vs analyst estimates of $1.00 (3.8% beat)
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Adjusted EBITDA: $1.65 billion vs analyst estimates of $1.56 billion (34.9% margin, 5.4% beat)
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Revenue Guidance for Q2 CY2025 is $5 billion at the midpoint, roughly in line with what analysts were expecting
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Adjusted EPS guidance for Q2 CY2025 is $1.20 at the midpoint, above analyst estimates of $0.98
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Operating Margin: 33.1%, up from 27.9% in the same quarter last year
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Free Cash Flow Margin: 21.6%, down from 33.8% in the same quarter last year
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Inventory Days Outstanding: 169, down from 172 in the previous quarter
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Market Capitalization: $91.63 billion
Lam Research’s first quarter results were shaped by product adoption in advanced foundry and memory markets, along with operational improvements in manufacturing and supply chain. CEO Tim Archer cited record foundry revenues and highlighted the company’s focus on new technology inflections—such as gate-all-around, advanced packaging, and dry EUV photoresist processing—as key contributors to performance. Gross margins reached their highest level since the Novelis merger, supported by Lam’s ongoing close-to-customer manufacturing strategy.
Looking ahead, Lam’s guidance for the next quarter reflects expected strength in NAND technology conversions and continued demand for leading-edge foundry logic. Management acknowledged the ongoing impact of global tariffs and a dynamic economic environment but said the company’s diversified global manufacturing footprint provides flexibility. Archer emphasized Lam’s confidence in outgrowing the broader semiconductor equipment market, noting, “Our strategic focus remains on delivering new products, advanced services, and digital transformation initiatives required to achieve growth and profitability outperformance.”
Management attributed the quarter’s performance to strong customer demand in advanced semiconductor manufacturing and effective execution of Lam’s technology roadmap. Product momentum and operational agility were the primary themes discussed during the call.
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Record Foundry Revenue: Lam achieved its highest-ever foundry revenues, driven by customer adoption of new technologies such as gate-all-around nodes and advanced packaging. The company significantly expanded its presence in Taiwan, reflecting successful product rollouts and market share gains.
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NAND Upgrade Opportunity: Upgrades to higher-layer NAND (moving from 1XX to 2XX+ layers) were a major revenue contributor. Management noted the $40 billion upgrade opportunity over several years, with both existing tool upgrades and new equipment sales expected to drive results as customers pursue higher-performance memory for AI and enterprise applications.
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Operational Flexibility Amid Tariffs: Lam’s global manufacturing and supply chain footprint, with facilities in the U.S., Asia, and Europe, enabled the company to reduce the direct impact of new tariffs. Management stated they are proactively repositioning operations as needed and can adjust production locations given enough lead time.
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Upgrades and Installed Base Growth: The Customer Support Business Group (CSBG) saw record revenue in upgrades, especially within NAND. Lam’s upgradeable system architecture is a differentiator, enabling customers to adapt existing equipment for new technology requirements, and is expected to support future revenue growth.
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New Product Development: Lam introduced new tools like the Stryker Spark ALD and ACARA conductor etch system, targeting critical process steps for leading-edge logic and memory manufacturing. Management referenced key wins for these products across major foundry and DRAM customers, and emphasized ongoing investment in R&D to support future technology roadmaps.
Management’s outlook for the next quarter and the rest of the year centers on sustained demand for advanced semiconductor manufacturing equipment, with a particular focus on technology upgrades and ongoing customer investments in new device architectures.
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Technology Transition Demand: Customer transitions to higher-layer NAND and advanced foundry nodes are expected to continue, supporting both system upgrades and new tool sales.
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Global Trade and Tariffs: Uncertainty around tariffs and evolving trade rules remains a risk, but Lam’s diversified manufacturing operations are positioned to adapt to changes in customer locations and global regulations.
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R&D and Product Expansion: Sustained R&D investment is expected to broaden Lam’s addressable market, with management prioritizing opportunities in deposition, etch, and equipment intelligence to drive future outperformance relative to overall market growth.
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C.J. Muse (Cantor Fitzgerald): Asked about the sustainability of NAND upgrade demand beyond next quarter; management explained a large installed base remains to be upgraded and expects both upgrades and new tool sales to play ongoing roles.
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Timothy Arcuri (UBS): Pressed for details on steps taken to minimize tariff impact; executives emphasized manufacturing flexibility but declined to share specific operational changes.
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Stacy Rasgon (Bernstein Research): Inquired about the sustainability of current gross margins given potential shifts in China business; CFO Doug Bettinger acknowledged margin variability due to customer and product mix.
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Vivek Arya (Bank of America): Sought clarification on the weighting of first versus second half revenues; management confirmed revenue is expected to be more first-half weighted due to shifts in customer plans and China restrictions.
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Joe Moore (Morgan Stanley): Asked about the outlook for Customer Support Business Group subsegments; management highlighted strong upgrades and spares demand, while noting ongoing headwinds in Reliant (specialty/legacy tools).
In the coming quarters, the StockStory team will monitor (1) the pace and breadth of NAND technology upgrades and the associated mix between upgrades and new tool sales, (2) the company’s ability to sustain gross and operating margins amid evolving tariff environments and customer geographic shifts, and (3) the adoption rate of Lam’s new process tools and digital solutions among leading foundry and memory customers. Execution on R&D investments and responsiveness to changes in global trade policy will also be important factors.
Lam Research currently trades at a forward P/E ratio of 18.9×. At this valuation, is it a buy or sell post earnings? Find out in our free research report.
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