Lam Research in the AI stack

The business and what the filings show

Lam Research makes etch and deposition equipment, the tools that carve and build up the layers of a chip. Over its latest four quarters it reported $26.1B of revenue, +33%, at a 51% gross margin and a 37% operating margin, growing faster than Applied Materials and KLA, its closest US peers in wafer-fab equipment.

Lam is more exposed to memory than its peers, because stacking memory cells and building high-bandwidth memory both depend heavily on etch and deposition. Its customers are concentrated: four accounted for about 16%, 15%, 12% and 12% of fiscal 2026 revenue. China represented about 34% of revenue in fiscal 2026, the same as the year before and down from 42% in fiscal 2024.

Its 10-K says the growth of AI and related infrastructure has been and is expected to remain a significant driver of equipment spending across both memory and logic, and warns that it could lose share if it cannot scale fast enough to meet AI-driven demand. For investors, Lam is a read on how much new manufacturing capacity the AI build-out is calling for, one step removed from the chips themselves.

How AI shows up in the numbers

AI shows up at Lam as equipment orders from memory makers building high-bandwidth memory and from foundries building advanced logic for accelerators. Equipment spending follows chip makers’ expectations for demand several years out, so Lam’s orders tend to move ahead of the chip cycle. That makes it a forward indicator for the layers above it, and also means it feels a slowdown in their capacity plans early.

For scale, Lam Research’s revenue over the latest four quarters equals 5% of the $566B the five largest buyers spent on capital projects over their latest four quarters. Their capex rose +81% on the year before, while Lam Research’s revenue grew +33%: slower than the spending, so it is capturing a smaller share of each new capex dollar, or more of its business sits outside the build-out.

How it talks about AI

Lam Research is not yet in the set of companies whose earnings releases we read sentence by sentence, so this section quotes its annual report on Form 10-K instead. Statements in a 10-K carry more weight than a press release or an earnings call: they are part of a filing the company signs and can be held to, and the risk factors in particular say what management believes could go wrong. The sentences below are quoted from its latest 10-K.

Read them for two things: how directly the company ties its growth to AI, and how much it is willing to quantify. A company that names AI as its main growth driver is making a claim its revenue mix can be checked against in the next filing; one that says AI’s effect is hard to measure is telling you its numbers won’t isolate it.

The figure to set these statements against is Lam Research’s own growth: revenue +33% over its latest four quarters at a 51% gross margin. If AI is driving the business as described, the next filings should show it in the mix of revenue by product or customer, and in margins that hold up as volumes grow.

• On AI demand: “For example, the growth of AI technologies and related infrastructure has been and is expected to continue to be a significant driver of capital equipment expenditures by semiconductor manufacturers across both the memory and non-memory market segments and requires us to respond (sometimes rapidly) to changes in demand for our products and services, including by expanding our equipment manufacturing capabilities and hiring additional personnel.” 10-K, August 7, 2026
• On its risks: “If we are unable to effectively scale our business to meet our customers’ requirements in response to AI-driven demand, we may lose market share, and our business, reputation, results of operations, and financial condition could be harmed.” 10-K, August 7, 2026

The trend in the numbers

Since the start of 2023, Lam Research’s largest quarter by revenue was Q3 2026 at $8.2B, and its highest gross margin was 52% in Q3 2026. The latest quarter set the revenue record for the period.

Quarter by quarter, Lam Research’s revenue grew +22% in Q4 2025, +24% in Q1 2026, +30% in Q2 2026, +54% in Q3 2026 on the same quarter a year earlier. Growth has been accelerating.

Gross margin in the latest quarter was 52%, against 50% a year earlier, so it is keeping more of each dollar as it grows. Operating margin moved from 34% to 40% over the same span. Over the latest four quarters it turned 29% of its revenue into operating cash flow and spent 4% of revenue on capital projects, against 4% a year earlier.

Where it sits in the stack

Lam Research sits in the foundry, equipment and design tools layer of the AI stack. It is paid by the chips and memory and networking layers.

Among the 10 companies in this layer on our map, it ranks number 4 by revenue and number 3 of 7 by revenue growth. Its gross margin of 51% compares with 52% for the layer as a whole, close to the layer average. The full layer analysis is on the foundry & tools page.

Latest four quarters for 10-Q filers; latest fiscal year for 20-F filers. Companies under $100 million of revenue are left out.

Against the 7 US-listed companies in its layer, Lam Research grew +33% over the latest year versus +21% for the layer combined, and converted 25% of revenue into free cash flow versus 22% for the layer. It is taking share of the layer’s revenue.

What has to go right, and what could go wrong

What has to go right. Memory and logic makers have to keep adding capacity for AI chips, and Lam has to scale production fast enough to keep its share as they do.

What could go wrong. Equipment spending is cyclical: if chip makers decide they have built enough capacity, Lam’s revenue falls before theirs does. Export controls on China add a policy risk on top.

These describe the conditions the business depends on, as the filings show them. They are not a view on the stock.

Through the lens of Investing in AI

Rob May’s book offers six mental models for telling AI moats from traps. The one most useful for Lam Research’s layer is “AI changes markets and corporate strategy”: When creation gets cheap, choke points move. Like the internet shifting newspaper profits to discovery, AI pushes moats toward coordination and control points. The winners sit at the new choke point, not the best AI story.

The question it asks of any company is: What becomes scarce in this value chain as AI makes the work abundant? Applied to Lam Research, the filings on this page are the place to start: the margin trend shows whether it holds scarce value or passes it through, the customer and financing disclosures show who it depends on, and the commitments show what it has promised before the revenue arrives.

Customers and concentration

US companies must disclose any customer that accounts for 10% or more of revenue, and foreign filers usually describe their largest customers. Concentration matters because a company’s growth is only as durable as the handful of buyers behind it, and in the AI stack those buyers are often the same few companies.

• “In fiscal year 2026, four customers accounted for approximately 16%, 15%, 12%, and 12% of total revenues, respectively.” 10-K, August 7, 2026
• “Revenue in China, which includes global customers and domestic Chinese customers with manufacturing facilities in China, represented approximately 34%, 34%, and 42% of our total revenue for fiscal years 2026, 2025, and 2024, respectively.” 10-K, August 7, 2026

Commitments and backlog

• Backlog. Lam Research reports $2.7B of remaining performance obligations, 0.1 times its revenue over the latest four quarters: contracted revenue not yet earned.
• Purchase commitments. $1.5B of unconditional purchase obligations as of June 28, 2026 (10-K): what it has contracted to buy from its own suppliers.

What to watch

Lam Research’s next quarterly report will cover the quarter ending around December 27, 2026. Large companies must file a 10-Q within 40 days of a quarter’s end and a 10-K within 60 days of the fiscal year’s end, so the new figures should arrive by about February 25, 2027 at the latest. This page, the layer pages and the next quarterly report all update from that filing.

• Revenue from memory customers, the part of its business most tied to high-bandwidth memory.
• China’s share of revenue, given export controls on advanced equipment.
• Capex plans at Micron, Samsung, SK Hynix and TSMC, which set Lam’s orders.
• Its place in the next quarterly AI Stack Report, which updates every company on the map from the new filings.

Figures from Lam Research’s SEC filings, latest period ended September 27, 2026. Other companies: all company pages.