Wolfe Research left its Peerperform rating on Lam Research (NASDAQ: LRCX) in place after the equipment maker reported December-quarter results that modestly topped expectations and issued March-quarter guidance ahead of consensus. The stock has delivered a substantial 221.72% return over the past year and is trading close to its 52-week high, according to available pricing data.
The company guided March-quarter revenue to $5.7 billion, which Lam characterized as growth of 7% quarter-over-quarter and 21% year-over-year. That March forecast surpassed the Street consensus of $5.2 billion by roughly 7%.
Lam also provided a projection for calendar year 2026 wafer fabrication equipment (WFE) spending of $135 billion, representing a 23% increase from the prior year. Management said that outlook outpaces what analysts had been modeling and exceeds the growth rate cited in a recent report from ASML. The firm emphasized continued strength in demand and indicated expectations for market-share gains within WFE spending.
Financial health and geographic exposure
Assessments of Lam’s financial profile remain positive: the company holds an overall "GREAT" rating on InvestingPro’s Financial Health Score, with particularly strong marks for profitability and price momentum. Geographically, China accounted for 35% of the company’s revenue in the December quarter, and Lam expects China revenue to be flat through calendar year 2026. Management’s outlook on China was highlighted as a factor that helps address concerns about potential declines in that important end market.
Valuation considerations and analyst responses
Wolfe Research underscored Lam’s expectation that systems revenue will grow at a rate that exceeds 23% year-over-year, reflecting the company’s aim to capture a larger slice of WFE spending. At the same time, Wolfe expressed caution around Lam’s valuation, noting a multiple of 33 times revised calendar year 2027 earnings estimates.
External valuation metrics referenced by market-data providers indicate an even higher trailing price-to-earnings ratio; InvestingPro data cited a P/E of 53.13 and flagged the shares as appearing overvalued under its Fair Value model.
Following the results and the stronger guidance, several brokerages moved to raise price targets on Lam Research. Evercore ISI increased its target to $275, citing the company’s earnings beat and the higher WFE spending outlook. RBC Capital lifted its target to $290, pointing to solid December-quarter results, a healthy WFE environment and market-share gains. BofA Securities set a $285 target after describing the quarter as a "solid beat and raise," and Oppenheimer moved its target to $265 while calling out guidance for 24% or higher revenue growth in 2026. Summit Insights upgraded the name from Hold to Buy, forecasting that Lam could gain a "disproportionate share" in an upcoming technology transition in memory segments.
Implications for investors
The company’s upgraded WFE outlook and reported outperformance have spurred positive analyst reactions, but elevated valuation multiples and concentrated exposure to China remain focal points for market participants. Investors weighing Lam’s shares must balance the firm’s operational momentum and market-share ambitions against those valuation and geopolitical considerations.