Needham analyst Charles Shi raised his earnings per share estimates for Lam Research Corp following the company’s fourth-quarter fiscal 2026 results and upgraded forward guidance. Needham maintained a Buy rating with a $390 price target, citing robust demand in NAND upgrades and logic sectors that drove sequential revenue growth of 15 percent to $6.7 billion.

The semiconductor equipment maker reported adjusted earnings per share of $1.82, beating consensus by 8.33 percent, while revenue reached $6.72 billion. Management raised its calendar year 2026 Wafer Fab Equipment (WFE) industry outlook to the low $150 billion range from $140 billion previously. This positive trajectory prompted Needham to increase its Calendar Year 2027 EPS estimate to $9.93 from $8.71 and its Calendar Year 2028 forecast to $10.20 from $9.70.

Financial Performance and Segment Growth

Lam Research’s Q4FY26 performance was characterized by record margins and strong end-market demand. Gross margin hit a record 52 percent, up 210 basis points sequentially, driven by pricing actions and operational efficiencies. The Company Business Group (CSBG) results were primarily driven by NAND upgrades and spares.

By end-market, NAND revenue surged 120 percent quarter-over-quarter, while Logic/IDMs grew 64 percent sequentially. In contrast, Foundry revenue fell 7 percent and DRAM declined 2 percent. Geographically, U.S. revenue rose 70 percent quarter-over-quarter, Taiwan grew 38 percent, and Korea remained flat.

Forward Outlook and Analyst Estimates

Looking ahead, Lam Research guided for third-quarter calendar 2026 revenue of $8.1 billion plus or minus $400 million, implying a 21 percent sequential increase. Gross margin guidance for the period stands at 52 percent plus or minus 1 percent. Needham expects Systems revenue to lead this growth with a 32 percent quarter-over-quarter gain.

Management also introduced multi-year targets to achieve gross margins in the mid-50 percent range and operating margins in the mid-40 percent range. Additionally, the company increased its Calendar Year 2026 advanced packaging growth forecast to over 70 percent year-over-year, up from the previous estimate of over 50 percent.

What the Numbers Show

The divergence between the modest revenue beat and the substantial earnings per share beat highlights significant margin expansion. With gross margin reaching a record 52 percent, Lam Research is demonstrating effective cost management alongside favorable product mix dynamics. The ability to guide for third-quarter revenue nearly $1 billion above the prior quarter’s actuals suggests that AI-driven demand is accelerating rather than plateauing. Needham’s adjustment of its price multiple from 40x to 38x for CY28 reflects sector-wide compression, yet the maintained $390 target underscores confidence in the company’s dominant position in the expanding WFE market.

Evercore ISI Group analyst Mark Lipacis has maintained an Outperform rating for Lam Research (NASDAQ: LRCX) and increased the price target to $355 from $300. The revised target indicates a stronger bullish stance on the stock's future performance.

The rating upgrade follows a reassessment of the company's position within the semiconductor equipment sector. By raising the target, the analyst signals confidence in Lam Research's ability to deliver shareholder value.

Lam Research continues to be a key player in the industry, and the new price target reflects updated expectations for its financial results and market standing.