Lam Research (LRCX) reported Q2 FY26 revenue of $5.344B, beating estimates by 2.01% with non-GAAP EPS of $1.27, clearing consensus by 8.7%, and guided Q3 revenue to $5.70B with expected gross margin compression to approximately 49.0% from 49.6% due to tariff pressures and customer mix shifts.
Lam enters its April 22 earnings print with four consecutive beats and a stock down 13% from its filing-date high, testing whether management can confirm that AI-driven equipment demand and structural product cycles in gate-all-around adoption and advanced packaging offset margin headwinds and China revenue concentration risks.
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Lam Research (NASDAQ:LRCX) reports fiscal third-quarter 2026 results on April 22 after the close. With four consecutive beats behind it and AI-driven equipment demand accelerating, this print will test whether momentum can hold through rising macro and geopolitical headwinds.
Last quarter, Lam posted $5.344 billion in revenue, beating estimates by 2.01% and growing 22.14% year over year. Non-GAAP EPS came in at $1.27, clearing the consensus of $1.1684 by 8.7%. Operating cash flow nearly doubled year over year to $1.480 billion. CEO Tim Archer called it “another strong quarter to cap a record year,” and guided Q3 revenue to $5.70 billion, a sequential step up that would mark continued acceleration. Since that report, the stock has pulled back from a filing-date price of $252.41 to roughly $218.90 today, even as the stock remains up 27.76% year to date. The pullback provides context for how the stock is positioned heading into April 22.
Metric
| Q3 FY26 Estimate | Q3 FY25 Actual (Year-Ago) | YoY Growth |
|---|
Revenue
| $5.70B | $4.720B | 20.7% |
Non-GAAP EPS | $1.35 | $1.04 | 29.8% |
Full Year FY26 Revenue (3Q run rate) | $16.37B through Q3 (Q1 + Q2 + Q3 guided) |
Full Year FY26 EPS (3Q run rate) | $1.26 (Q1) + $1.27 (Q2) + $1.35 guided (Q3) |
Gross margin warrants the closest attention. The trajectory has compressed modestly over the past two quarters: 50.6% in Q1 FY26, then 49.6% in Q2 FY26, with guidance pointing to approximately 49.0% in Q3. Management has flagged tariff pressures and customer mix shifts as the primary culprits. Any upside surprise on margins would signal that Lam is managing cost headwinds better than expected and could reset the stock’s post-pullback narrative.
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China revenue concentration is the second watch item. China represented 35% of Q2 revenue, down from 43% in Q1 FY26. That normalization was expected, but export control risk has not gone away. Any commentary about further restrictions or customer behavior shifts in China will carry weight with investors who have already seen the stock underperform broader indices in the 30 days following the last earnings report.
The systems revenue line is another key metric to track. Q2 systems revenue came in at $3.357 billion, compared to $3.548 billion in Q1 FY26. A recovery toward or above Q1 levels would confirm that equipment demand from leading-edge customers in foundry, logic, and NAND is holding firm. Archer has pointed to gate-all-around adoption, molybdenum deposition wins, and advanced packaging as multi-year structural drivers. Confirmation that these product cycles are ramping up on schedule matters more than any single quarter’s headline number.
Finally, guidance tone for Q4 FY26 will set the stock’s direction. Lam has beaten estimates in all four of the last four quarters. With 27 analyst buy ratings and zero sells, expectations are constructive and grounded in a four-quarter beat streak. A conservative guide would likely pressure shares further; a confident one could close the gap back toward the analyst consensus target of $274.90.
Lam enters April 22 with a stock trading well below its post-Q2 highs, a perfect beat streak, and a product portfolio aligned with the most durable spending theme in semiconductors. The question heading into this print is whether management can deliver results that justify the AI-driven growth story while reassuring investors that margin compression and China exposure are manageable. A clean beat with steady guidance would likely close the gap toward prior highs, based on how the stock has historically responded to earnings surprises.
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