When Lam Research Corp. reports earnings after Wednesday’s closing bell, analysts will be looking for key insights into the future of the wafer-fab-equipment market and the projected growth for next year.
Consensus Numbers
Here are some of the consensus numbers analysts surveyed by FactSet expect for the Fremont, Calif.-based Lam:
- First-quarter adjusted earnings: $6.15 per share (based on the company’s forecast of $5.30 to $6.80 per share)
- First-quarter revenue: $3.42 billion (forecast range: $3.1 billion to $3.7 billion)
- System revenue: $1.91 billion (down from last year’s $3.18 billion)
- Customer-support-related revenue: $1.54 billion (compared to $1.89 billion in the year-ago quarter)
- Second-quarter earnings: $6.77 per share on expected revenue of $3.65 billion
Lam’s Role in the Industry
Lam Research Corp. plays a vital role in the semiconductor industry by manufacturing highly sophisticated clean-room machinery. These machines are used by foundries like Taiwan Semiconductor Manufacturing Co. to process silicon for chips designed by companies such as Nvidia Corp. and Apple Inc.
Government Regulation
Despite the U.S. government’s recent ban on sales of artificial intelligence technology to China, analysts remain skeptical about its impact on Lam Research Corp.’s business in a significant way.
Impact on Lam Research Limited
Analysts at Citi Research have stated that they do not anticipate a significant impact on Lam Research Limited from the addition of 13 new Chinese companies to the export entity list. This news comes in light of similar comments made by peer company ASML Holding NV. The management at Lam Research is not expected to discuss its 2024 outlook in this earnings report, as they usually provide it in January.
ASML Holding NV’s Lowered Orders and Caution from Customers
Earlier in the day, Netherlands-based ASML Holding NV reported that its orders were lower than previous quarters and that customers had become more cautious with their cash. In addition, ASML mentioned that the widened China restrictions would only affect a limited number of their facilities, and revenues would be minimally impacted. As a result of this news, ASML shares fell more than 4% on Wednesday.
Analyst Ratings and Projections
Raymond James analyst Srini Pajjuri recently initiated coverage on Lam Research, KLA Corp., and Applied Materials Inc. with outperform ratings. Pajjuri also gave ASML a strong buy rating. Pajjuri expects the spending on wafer-fab equipment to bottom out by the end of the year and predicts high-single-digit growth in the long term. Despite potential risks from China export controls, Pajjuri believes that the demand for generative-AI will mitigate any negative effects from slowed PC and smartphone demand.
Strong Performance for Lam Research
Year to date, Lam Research shares have seen a significant surge of 53%, outpacing the 35% rally in the PHLX Semiconductor Index, the 13% gain for the S&P 500, and the 28% rise in the tech-heavy Nasdaq Composite Index. This demonstrates the strong performance and investor confidence in Lam Research Limited.
