QS Research · Michael Burry's Scion Capital analyst template · 2006
LAM RESEARCH CORP (LRCX)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: SHORT
Conviction high · base case -44% · downside -54% · upside -32%
All three cases use section 13's six-year FY2021-FY2026 average operating income of $5.57B (S2), not TTM EBIT of $9.65B (N13), because TTM is 1.7x the cycle average and reflects peak AI/WFE demand. At 20x-30x normalized EBIT plus $3.72B net cash ($7.44B cash N21 less $3.72B debt N22) on 1,249.17M shares (N5), value is $92-$137/share versus $202.19 (N1), so base 25x is about $114 (-44%), downside 20x about $92 (-54%), and upside 30x about $137 (-32%). The market is capitalizing record FY2026/TTM earnings as permanent; the peak-earnings case (32.2x TTM net income, ~$218, +8%) is noted only as a ceiling if today's record persists, not as the upside case because it switches to the peak earnings base. The business is better than the FY2024 trough-services, advanced packaging/HBM and dry resist help-but that does not bridge the normalized valuation gap.
Key numbers
- Share price: $202.19
- Market cap: $252.56B
- Latest financial period: TTM to Sep 27, 2026
- Revenue (TTM): $26.13B
- EV / EBITDA (TTM): 24.6x
- P/E (TTM): 29.9x
- Price / book: 18.16x
The 15 boxes
- ✓ 1. Long-form business notes
LRCX sells wafer fabrication equipment and services into deposition, etch, clean, and (by FY2026) dry resist product areas, to memory, foundry, and IDM customers. FY2026 revenue was $23.23B, operating income $8.20B, and operating cash flow $5.86B; the FY2021-FY2026 data show a cyclical swing with revenue falling from $17.43B in FY2023 to $14.91B in FY2024 before rising to $23.23B in FY2026. The FY2021-to-FY2026 10-K comparison shows a product portfolio shifted toward advanced packaging/HBM and EUV dry resist, while CSBG services/spares/upgrades remain a lifecycle revenue stream. The sources do not disclose product-line or segment revenue, unit volumes, or TTM figures.
- ✓ 2. Competitive advantage
LRCX has a real but narrow moat: once a tool is qualified at a specific production application and technology node, customers generally stay, which is a switching-cost moat built on process know-how and installed-base service rather than on patents or brand. The numbers back it up through the cycle: revenue fell -14% from $17.43B (FY2023) to $14.91B (FY2024) but gross margin only moved from 44.6% to 47.3% and operating margin from 29.7% to 28.6%, then expanded to 50.5% gross / 35.3% operating on $23.23B revenue in FY2026. It is not a sole-source franchise: Applied Materials, Hitachi, Tokyo Electron, ASM International, Wonik IPS, Screen and Semes compete in every one of its markets, third-party spare-parts vendors attack the installed-base annuity, and US export controls hand a cost/access advantage to non-US rivals.
- ✓ 3. 10-Q takeaways
The latest 10-Q for the quarter ended 2026-09-27 shows a strong cyclical upswing: revenue was $8.219B, up 22% q/q, and gross margin was 52.3%, with systems revenue up 35% q/q. Net income was $2.753B and diluted EPS $2.19, while operating cash flow was $3.50B and cash rose to $7.45B; the company repurchased $1.02B of stock and paid $325.4M of dividends. Outlook is qualitative only, and the risk-factor update flags rapid technology change and AI obsolescence without quantification.
- ✓ 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
- ○ 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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