Lam Research Corporation (LRCX, Financial) has reported impressive financial results for the first quarter, exceeding market expectations with a revenue of $4.72 billion. This figure surpasses the consensus estimate of $4.64 billion, highlighting the company's robust performance in the semiconductor sector.
The CEO of Lam Research, Tim Archer, expressed confidence in the company's strategic positioning. He emphasized that the firm's current product offerings are at their most compelling stage, paving the way for expansion in their addressable market, increased market share, and enhanced service innovation. This growth is anticipated to be driven by heightened demand for deposition and etch technologies in advanced semiconductor production.
Despite facing short-term challenges related to tariffs, Lam Research remains optimistic about its future prospects. The company is confident in its capacity to outpace the overall growth of the semiconductor industry in the coming years, reinforcing its status as a key player in the market.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 25 analysts, the average target price for Lam Research Corp (LRCX, Financial) is $91.57 with a high estimate of $125.00 and a low estimate of $70.00. The average target implies an upside of 37.44% from the current price of $66.63. More detailed estimate data can be found on the Lam Research Corp (LRCX) Forecast page.
Based on the consensus recommendation from 30 brokerage firms, Lam Research Corp's (LRCX, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Lam Research Corp (LRCX, Financial) in one year is $68.54, suggesting a upside of 2.87% from the current price of $66.625. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Lam Research Corp (LRCX) Summary page.
Key Business Developments
Release Date: January 29, 2025
- Revenue: $16.2 billion for calendar year 2024; $4.38 billion for the December quarter, a 5% increase from the prior quarter.
- Diluted Earnings Per Share (EPS): $3.36 for calendar year 2024; $0.91 for the December quarter.
- Gross Margin: 48.2% for calendar year 2024; 47.5% for the December quarter.
- Operating Margin: 30.7% for the December quarter; 160 basis point improvement for calendar year 2024.
- CSBG Revenue: Increased 11% to $6.6 billion for calendar year 2024; $1.8 billion for the December quarter.
- Deferred Revenue: $2 billion at the end of the December quarter.
- Regional Revenue Composition: China 31%, Korea 25% for the December quarter.
- Capital Return: $650 million in share repurchases and $298 million in dividends for the December quarter; 98% of free cash flow returned in 2024.
- Cash and Short-term Investments: $5.7 billion at the end of the December quarter.
- Inventory: $4.4 billion at the end of the December quarter.
- Capital Expenditures: $188 million for the December quarter.
- Employee Count: Approximately 18,300 regular full-time employees at the end of the December quarter.
- Guidance for March 2025 Quarter: Revenue of $4.65 billion, Gross Margin of 48%, Operating Margin of 32%, EPS of $1.00.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Lam Research Corp (LRCX, Financial) reported strong financial results for the December 2024 quarter, with revenue, gross margin, operating margin, and EPS all exceeding guidance midpoints.
- The company achieved record highs in system revenues for both DRAM and Foundry Logic, demonstrating the strength of its product portfolio.
- Lam Research Corp (LRCX) is well-positioned to benefit from technology inflections in AI applications, with shipments for gate-all-around nodes and advanced packaging expected to exceed $3 billion in 2025.
- Strategic investments in R&D and infrastructure have begun to yield important product advances, such as the Cryo 3.0 technology and Aether dry resist solution.
- The company delivered a 160 basis point improvement in operating margin for calendar year 2024, reflecting efficient scaling of operations and strategic investments.
Negative Points
- NAND spending remained at muted levels in 2024, impacting overall growth despite strong performance in other segments.
- The company faces headwinds from customer concentration, which may affect gross margins as the year progresses.
- Lam Research Corp (LRCX) anticipates a $700 million impact from new regulations restricting sales to certain Chinese customers in 2025.
- Reliant product line within the Customer Support Business Group (CSBG) is expected to face headwinds due to reduced spending in mature nodes outside of China.
- The company expects its China revenue percentage to decrease in 2025 compared to 2024, due to geopolitical and regulatory challenges.
