"‘American ASML’ performance skyrockets! Lam Research posts record quarterly revenue, CEO says next year will be ‘quite good’ too."

```

The wave of AI data center construction is directly converting into orders for chip equipment suppliers.

On April 22, Eastern US time, US semiconductor equipment manufacturer, known as the "US version of ASML" — Lam Research, released its fiscal 2026 third-quarter earnings report (ending March 29, 2026). The report showed that both revenue and earnings per share hit record highs for consecutive quarters, surpassing Wall Street expectations, with the stock rising about 4% after hours. Key financial data from the report:

This quarter's revenue reached $5.84 billion, up 24% year-on-year and 9% quarter-on-quarter, exceeding analysts' previous expectations of $5.75 billion.
GAAP net profit was $1.825 billion, up about 37% from $1.331 billion in the same period last year, and 14% up from $1.594 billion in the previous quarter.
Non-GAAP diluted earnings per share were $1.47, higher than the market expectation of $1.36, up about 41% year-on-year from last year’s $1.04.
Operating margin rose from 33.1% to 35.0% year-on-year, with continued improvement in profitability.
This quarter’s GAAP gross margin was 49.8%, a quarter-on-quarter increase of 20 basis points.

CEO Tim Archer stated in the earnings release: “Lam Research achieved dual quarterly records in revenue and EPS for the March quarter. AI-driven demand is reshaping the semiconductor industry. Our strategic investments and operational efficiency are creating strong momentum, supporting customers’ AI roadmaps, and driving Lam Research to continually outperform the market during this key growth phase.”

On the earnings call, Archer further commented: “For Lam Research, the AI-driven demand environment is creating ideal conditions to continuously outperform the market.” Looking ahead, he also said, “It now feels that 2027 will be quite a good year.”

AI Demand Drives Continued Boom for the 'Shovel Business'

Lam Research’s core products are etch and deposition equipment—which, simply put, are machines used to carve and stack microscopic circuits on silicon wafers, an indispensable step in the chip manufacturing process. Along with Applied Materials and Tokyo Electron, it is a leading global supplier in this market.

As AI data center construction accelerates, chip manufacturers like TSMC and Micron are significantly increasing capital expenditure, driving up equipment demand. This upcycle began at the end of 2023 and continues to stretch forward.

From the revenue breakdown, system equipment revenue for the quarter was $3.73 billion, while customer support and service revenue was $2.11 billion, both increasing from the previous quarter.

By region, China remains the largest market, accounting for 34% of this quarter’s revenue; Korea and Taiwan each contribute 23%; Japan, 8%; and the US domestic market only 6%.

Next Quarter Guidance Again Exceeds Expectations

For the fourth quarter of fiscal 2026 (ending June 28, 2026), Lam Research’s revenue guidance is $6.6 billion (± $400 million) and non-GAAP diluted earnings per share is about $1.65 (± $0.15), both above analysts’ tracked LSEG data and market expectations.

Gross margin guidance is 50.5% (±1%), operating margin guidance is 36.5% (±1%), both improved from this quarter. If achieved, this would mark Lam Research’s third consecutive quarter of record revenue.

A Detail Worth Paying Attention To: Decline in Customer Advance Payments

Behind the highlights of the earnings report is a detail that caught the market’s attention: End-of-quarter deferred revenue was $2.22 billion, down slightly from last quarter’s $2.25 billion, and customer prepayments were down about $300 million quarter-on-quarter—reaching a nearly four-year low.

Deferred revenue represents "orders paid for but not yet delivered". A reduction in prepayments may be a normal shift of orders between quarters, but it may also indicate that customers are becoming more cautious in the rhythm of making financial commitments.

Financial media Finimize noted, “Large chip projects often do not advance at a constant speed, but in pulses,” and equipment orders move in wave-like patterns. The deferred revenue balance remains high, signaling sufficient outstanding orders; however, the reduction in prepayments reminds external investors to pay closer attention to short-term demand dynamics.

Cash Flow and Capital Return

On the cash side, end-of-quarter cash and cash equivalents fell to $4.75 billion, down over $1.4 billion from last quarter’s $6.18 billion. The main reason was large-scale capital return this quarter: about $1.16 billion spent repurchasing shares, about $750 million repaid in debt principal, and about $330 million paid in dividends.

Cash flow from operations for the quarter was $1.14 billion, lower than the previous quarter’s $1.48 billion, mainly dragged down by changes in working capital (accounts receivable increased by about $640 million). Operating cash flow for the first three quarters totals $4.4 billion, and the balance sheet remains overall robust.

Cycle Perspective: Upcycle May Continue Into 2027

From a longer cycle perspective, Lam Research has long relied on cyclical demand driven by consumer electronics, but the AI era has changed that logic. Barron's notes that this upcycle began at the end of 2023 and "looks set to extend into next year," with Lam Research potentially setting revenue records for three consecutive quarters.

In the wave of AI capital expenditures, equipment suppliers play the role of “shovel sellers”, with relatively higher demand visibility. But Barron's also notes that the average analyst target price is about $286, implying that expectations for 2026–2027 growth are already somewhat reflected in the current share price—“and some investors are even positioning for the next downcycle.”

Risk warning and disclaimerThe market carries risks, and investment requires caution. This article does not constitute personal investment advice and does not take into account the unique investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their specific circumstances. Any investments made based on this, responsibility is solely your own. ```