QS Research · Michael Burry's Scion Capital analyst template · 2006
LAM RESEARCH CORP (LRCX)
As of 2026-11-08 · 13/15 boxes filled from SEC filings and market data
Conclusion: SHORT
Conviction medium · base case -42% · downside -55% · upside -14%
The market is not missing the current boom; it is paying for it. TTM net income is $8.45B (N16), and at the 29.6x P/E (N32) the $250.38B market cap (N9) already requires $8.46B of net income, but six-year average net income is $4.92B and the FY2024 trough was $3.83B (S2). On the same 29.6x P/E, average earnings are $4.92B x 29.6 = $145.6B / 1,249.17M shares = $116.6 (-41.8% vs $200.44), trough earnings are $3.83B x 29.6 = $113.4B / 1,249.17M = $90.8 (-54.7%), and even FY2026 peak earnings of $7.27B x 29.6 = $215.2B / 1,249.17M = $172.3 (-14.0%); all three are below today. I would short, with medium conviction because AI demand could extend the peak; the non-valuation catalyst is the one-sided insider tape (73 open-market sales, $194.6M, versus one 9-share buy, S97/S98).
Key numbers
- Share price: $200.44
- Market cap: $250.38B
- Latest financial period: TTM to Sep 27, 2026
- Revenue (TTM): $26.13B
- EV / EBITDA (TTM): 24.4x
- P/E (TTM): 29.6x
- Price / book: 18.00x
The 15 boxes
- ✓ 1. Long-form business notes
Lam is a 1980-incorporated Fremont, California supplier of wafer fabrication equipment and services—deposition, etch, clean and dry resist—sold to memory, foundry and IDM customers, plus an installed-base CSBG service/spares/upgrades business. The FY2026 10-K shows a broader product table than FY2021 (Aether dry resist, selective etch, Vantex, Akara; the FY2026 table does not list SOLA or SPEED) and a demand narrative shifted from cloud/IoT to AI/cloud infrastructure. Financials are cyclical: revenue ran $14.63B in FY2021, $17.43B in FY2023, fell to $14.91B in FY2024, then $18.44B in FY2025 and $23.23B in FY2026; operating income followed. These sources give no segment/CSBG revenue split, unit volumes, backlog, or TTM/quarterly figures.
- ✓ 2. Competitive advantage
Lam has a real but narrow moat: once a tool is qualified at a customer for a given application and technology node it tends to stay there, and Lam sits among the two or three suppliers customers actually evaluate in deposition, etch and wet clean. The six fiscal years in the data back it up with money, not adjectives: gross profit rose from $7.78B on $17.43B revenue in FY2023 to $11.73B on $23.23B in FY2026 (about 44.6% to 50.5% gross margin, my arithmetic on S28), and operating income never went negative even in the FY2024 revenue trough ($4.26B on $14.91B). The moat is qualification lock-in and scale, not patents; the counterweights are a competitor set that includes Applied Materials and Tokyo Electron, third-party parts competition, and U.S. export controls that the 10-K says help non-U.S. rivals.
- ✓ 3. 10-Q takeaways
The September 2026 quarter (period ended 2026-09-27) was the strongest in the materials: revenue $8,219.4 million, +22% q/q, gross margin 52.3% (+60 bps q/q), GAAP operating margin 40.0% (+260 bps), net income $2,753.1 million and diluted EPS $2.19; management calls it record revenue, profit and EPS. Cash went to $7.45 billion on $3.50 billion of quarterly operating cash flow, funding $1.02 billion of repurchases (including $1.00 billion of accelerated share repurchase agreements) and $325.4 million of dividends; inventory was a $311.3 million use of cash as receivables and inventory built with volume. Guidance for the December 27, 2026 quarter is fully numeric: revenue $8.60 billion +/- $400 million, gross margin 52.5% +/- 1%, operating margin 40.5% +/- 1%, diluted EPS $2.33 +/- $0.15. The 16.9% effective tax rate carries a U.S. tax-law change item, so operating income (40.0% margin, $3,283.7 million) is the cleaner read on the quarter than net income.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ✓ 11. Impression of the shareholder letter
Filled; members read this box.
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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