LRCX
Lam Research Corporation
Technology · Semiconductor Equipment & Materials · United States · Stock
Score Breakdown
Scored for Aggressive Growth profile
Sub-scores are 0–20 each; Model Score is weighted by your selected investment goal. How it works →
Why Ranked Here
- Lam Research earned a strong composite score of 72.6/100 driven primarily by a perfect profitability score reflecting its 32.0% operating margin and 25.1% return on assets, combined with a near-top growth score from +23.7% revenue and +43.1% EPS expansion.
- The momentum factor also contributed meaningfully, as sequential quarterly revenue growth from $5.17 billion to $5.84 billion and operating income rising to $2.05 billion in 2026Q3 demonstrated clear business acceleration.
- Conservative financial health metrics — a 0.45 debt-to-equity ratio and 33.3x interest coverage — supported the Low risk rating and Core Holding Candidate label.
Why Not Higher
- The theme factor contributed zero points despite Lam Research's assignment to the AI Infrastructure and Semiconductors macro themes, representing a meaningful gap in the composite score under the model's current methodology.
- The dividend score was held to a mid-range level by the irregular historical payout pattern — including the sharp drop from $6.00 in FY2022 to $0.69 in FY2023 — and the modest absolute yield implied by a 21.5% payout ratio.
Data Confidence
10 / 10
Very High — full data coverage
Why This Score
Grounded in figures from this company's SEC EDGAR filings — not a restatement of the score itself.
Revenue grew from FY2024's $14,905,386,000 to FY2025's $18,435,591,000, a gain of +23.7%. Net income rose +40.0% over the same period, and diluted EPS expanded +43.1% from FY2024 to FY2025.
The model rewarded the combination of strong top-line expansion and even faster bottom-line growth, with EPS outpacing revenue growth due to margin improvement and share count dynamics, producing a near-top score.
In FY2025, Lam Research posted an operating margin of 32.0%, a net margin of 29.1%, and a return on assets of 25.1%.
The model awarded a perfect score, reflecting that all three profitability metrics — operating efficiency, after-tax earnings retention, and asset productivity — reached levels consistent with best-in-class semiconductor equipment peers.
In FY2025, Lam Research carried a debt-to-equity ratio of 0.45 and an interest coverage ratio of 33.3, against a total asset base of $21,345,260,000.
The model recognized a conservative leverage position and very comfortable debt-service capacity, though the score falling short of the maximum likely reflects data gaps or balance-sheet composition factors not fully captured in the available metrics.
Revenue trended upward across the last four quarters — $5,171,393,000 in 2025Q4, $5,324,173,000 in 2026Q1, $5,344,791,000 in 2026Q2, and $5,841,488,000 in 2026Q3. Operating income followed a similar acceleration, rising from $1,741,128,000 in 2025Q4 to $2,047,016,000 in 2026Q3, while net income dipped modestly in 2026Q1–Q2 before recovering to $1,825,460,000 in 2026Q3.
The model rewarded the clear sequential acceleration in both revenue and operating income into the most recent quarter, with the temporary net income softness in the middle quarters only modestly tempering the overall momentum score.
In FY2025, the dividend payout ratio was 21.5% of net income. Dividends per share history shows FY2022=6, FY2023=0.69, FY2024=0.80, and FY2025=0.92.
The model recognized a consistent and gradually rising per-share dividend from FY2023 through FY2025, paired with a conservative payout ratio that leaves ample room for reinvestment; the mid-range score likely reflects the modest absolute yield level and the irregular historical pattern, including the sharp drop from FY2022 to FY2023.
Lam Research is assigned to the AI Infrastructure and Semiconductors macro themes.
Although the company carries two high-profile macro theme assignments, this assignment did not translate into a positive score under the model's current methodology for this factor.
Research Summary
AI-generated analysis reflects data and conditions as of the report date shown above. Verify any specific figures through primary sources before acting on this analysis.
Lam Research delivered exceptional financial performance in FY2025, with revenue growing +23.7% to $18.4 billion and net income surging +40.0%, while diluted EPS expanded +43.1% as margin improvements and share count dynamics amplified bottom-line gains. The company achieved best-in-class profitability metrics including a 32.0% operating margin, 29.1% net margin, and 25.1% return on assets, earning a perfect profitability score. Sequential quarterly momentum has been strong, with revenue accelerating from $5.17 billion in 2025Q4 to $5.84 billion in 2026Q3 and operating income climbing to over $2.0 billion in the most recent quarter. The balance sheet remains conservatively positioned with a debt-to-equity ratio of 0.45 and interest coverage of 33.3x, supporting a Low risk rating and a Core Holding Candidate label.
Plain English
Lam Research is a semiconductor equipment company that grew its sales by nearly a quarter and nearly doubled its profit efficiency last year, while continuing to generate more revenue each quarter — making it a financially strong, steadily growing business with low debt and a modest but rising dividend.
Bull Case vs. Bear Case
Bull Case
- Revenue and earnings growth are firing on all cylinders: FY2025 revenue rose +23.7% and net income jumped +40.0%, with diluted EPS expanding +43.1% — demonstrating that profitability is scaling faster than the top line.
- Profitability metrics are best-in-class, with a 32.0% operating margin, 29.1% net margin, and 25.1% return on assets in FY2025, reflecting exceptional operational efficiency across the business.
- Quarterly momentum is accelerating, with revenue rising from $5.17 billion in 2025Q4 to $5.84 billion in 2026Q3 and operating income reaching $2.05 billion in the most recent quarter, signaling continued business strength.
Bear Case
- The dividend history shows an irregular pattern, with dividends per share collapsing from $6.00 in FY2022 to $0.69 in FY2023 before gradually recovering to $0.92 in FY2025, which may raise questions about dividend reliability for income-focused investors.
- Net income showed a modest dip in 2026Q1 and 2026Q2 even as operating income rose, suggesting some below-the-line cost pressures that could weigh on reported earnings if they persist.
- The theme factor contributed zero points to the composite score despite Lam Research being assigned to the high-profile AI Infrastructure and Semiconductors macro themes, indicating the model did not reward thematic exposure under its current methodology.
What Could Change the Picture
Bullish Triggers
- A sustained acceleration in quarterly revenue and operating income beyond the 2026Q3 levels — particularly if net income catches up to operating income growth — would reinforce the bull case for continued margin expansion.
- A normalization or increase in the dividend payout trend, building on the FY2023-to-FY2025 recovery from $0.69 to $0.92 per share, could improve the dividend score and broaden investor appeal.
Bearish Triggers
- If the net income softness observed in 2026Q1 and 2026Q2 deepens or spreads to operating income, it could signal that the strong FY2025 profitability metrics are not sustainable.
- Any deterioration in the debt-to-equity ratio or interest coverage ratio from their current conservative levels of 0.45 and 33.3x respectively would be a meaningful negative signal for financial health.
Risk Profile
Low RiskLam Research's financial health appears robust, with a debt-to-equity ratio of 0.45 and interest coverage of 33.3x in FY2025, indicating very low leverage risk and ample capacity to service debt obligations. Quarterly momentum has been consistently positive in revenue and operating income, though the temporary net income softness in 2026Q1 and 2026Q2 is a factor worth monitoring.
Key Catalysts to Watch
The sequential acceleration in quarterly revenue to $5.84 billion and operating income to $2.05 billion in 2026Q3 suggests building business momentum that could serve as a near-term positive catalyst.
This report is for educational and research purposes only. It does not constitute financial, investment, legal, or tax advice — always conduct your own due diligence before making investment decisions.