Company Overview LAM Research is a supplier of wafer-fabrication equipment to the semiconductor industry with a high-margin, cash-generative financial profile ( TTM revenue $17.43B , trailing twelve‑month ROE 61.2% ). Profitability & Capital Efficiency The company exhibits strong profitability and capital efficiency: gross margin is 44.6% , operating margin 39.8% and net margin 25.9% , reflecting
LAM Research is a supplier of wafer-fabrication equipment to the semiconductor industry with a high-margin, cash-generative financial profile (TTM revenue $17.43B, trailing twelve‑month ROE 61.2%).
The company exhibits strong profitability and capital efficiency: gross margin is 44.6%, operating margin 39.8% and net margin 25.9%, reflecting substantial pricing power and operational leverage (see Profit Margin Trends).
Earnings and per‑share performance have compounded meaningfully over time — five‑year diluted EPS CAGR is about 15.95% and the most recent diluted EPS reached $47.07 — while revenue per share sits at $132.04, supporting multi‑year growth momentum (see Revenue & EPS Growth and see EPS Diluted & Revenue per Share).
Cash generation is robust; operating cash flow climbed from $3.10B (TTM 2022) to $6.17B (most recent TTM), and free cash flow margin is roughly 29.5%, underscoring the conversion of earnings into cash (see Strategic Capital Allocation and see Earnings Quality Analysis).
Areas of concern include sizable cash returned or deployed through financing: financing cash flow was a net outflow of ‑$4.94B in the most recent TTM and investing cash flow has moved from a positive $612.3M (2022 TTM) to negative ‑$783.6M (most recent TTM), indicating rising investing and capital deployment that should be monitored (see Strategic Capital Allocation).
Quarterly profitability has shown some variability: net income had a large $2.23B quarter in 2023-06 and more recently quarterly results have ranged around $1.57–$1.72B, with EPS growth swinging from negatives in 2024 (as low as ‑24.9% in 2024‑09) to +44.7% in 2025‑12, highlighting cyclicality tied to semiconductor demand (see Revenue & Net Income and see Revenue & EPS Growth).
Key fundamentals to monitor going forward are consolidated revenue and trailing net income trends and their per‑share equivalents (see Revenue & Net Income), margin expansion or compression (see Profit Margin Trends), the relationship between net income and operating cash flow (see Earnings Quality Analysis), changes in ROE (see Return on Equity (ROE)), and the evolution of investing and financing cash flows and the company’s P/E multiple (most recent P/E 3.7x) as reported in see Strategic Capital Allocation and see Price-to-Earnings (PE) Ratio Trend.
The foundation of business quality and long-term value creation
LAM RESEARCH CORP's net income has trended higher through 2024 and into 2025. Quarterly net income rose from $965.8M on to $1.19B on , then increased to $1.33B () and peaked at $1.72B on before moderating to $1.57B () and $1.59B (). A notable earlier inflection is the large $2.23B net income recorded on , which stands above the more recent elevated quarterly levels.
Revenue entries in the dataset show multi-year expansion, rising from $1.12B on to $7.32B on and to $17.43B on . The most recent net income observed in the data was $1.59B. The most recent revenue observed in the data was $17.43B.
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Period Information
Report Type: Annual (10-K)
Period: Jun 2022 to Jun 2023
Analyzing long-term margin stability and competitive positioning
LAM RESEARCH CORP's margins show a clear upward shift into the most recent quarter. Gross margin has been relatively high and stable, rising from the high-30s in 2012–2013 to the mid-40s by the 2023-06-25 period. Operating and net margins exhibit larger variability but have also moved materially higher in recent years, with both operating efficiency and bottom-line profitability strengthening toward the latest reading.
Notable inflection points include the low operating and net margins around 2012–2013 (single-digit net margins and low single-digit operating margins) followed by a multi-year recovery beginning around 2014 and further improvement through 2019 and into 2023.
The most recent values are:
Understanding Profit Margins
Between Jun 2022 and Jun 2023, Lam Research Corp converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
LAM RESEARCH CORP’s trailing twelve-month net income and operating cash flow have both trended upward over the multi-year series. Net income rose from low‑single‑digit billions in 2019–2020 to a sequence of increases across 2023–2025, moving from $4.29B (period ending 2024-12-29) to $5.36B (2025-06-29), $5.81B (2025-09-28) and $6.21B (2025-12-28). Operating cash flow shows a similar multi-year rise, climbing from $3.10B (2022-06-26) to $5.18B (2023-06-25) and reaching $6.17B by the period ending 2025-06-29.
Recent quarters show the two metrics tracking closely with only small gaps: operating cash flow exceeded net income in mid‑2025 ($6.17B vs $5.36B at 2025-06-29), but the most recent net income observation is slightly higher than the last reported operating cash flow. The most recent Net Income (TTM) was $6.21B and the most recent Operating Cash Flow (TTM) was $6.17B.
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
Over the most recent four reported quarters, LAM RESEARCH CORP's trailing twelve-month ROE has trended upward, moving from 49.0% for the period ending 2025-03-30 to 54.3% (2025-06-29), 57.0% (2025-09-28), and 61.2% (2025-12-28).
This sequence shows a steady quarter-to-quarter increase through 2025, with the latest quarters all above 50%.
The most recent quarterly Return on Equity was 61.2%.
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
Over the most recent trailing-twelve-month periods, LAM RESEARCH CORP's operating cash flow has trended upward, increasing from $3.10B (TTM ending 2022-06-26) to $5.18B (TTM ending 2023-06-25) and reaching $6.17B in the latest TTM (period ending 2025-06-29).
Investing cash flow shifted from a positive $612.3M in the 2022 TTM to negative territory in subsequent years (‑$534.6M in the 2023 TTM) and moved further negative in the most recent reading (TTM ending 2025-09-28 at ‑$783.6M), indicating growing net cash used in investing activities.
Financing cash flow has been a net outflow across multiple TTMs, ranging from -$623.9M in 2020 to larger outflows of -$4.58B (2022 TTM), -$2.83B (2023 TTM), and -$4.94B in the most recent TTM (period ending 2025-06-29).
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
Over the most recent year, LAM RESEARCH CORP's trailing twelve-month P/E moved higher, rising from 2.1x at 2025-03 to 3.7x at 2025-12, with intermediate readings of 2.4x (2025-06) and 3.0x (2025-09). This follows a dip in late 2024 — 2.2x at 2024-12 after a 3.7x reading in 2024-06 — showing renewed upward movement through 2025. Earlier periods show larger variability: a low of 1.5x in 2023-09 and a historical peak of 5.1x in 2013-06.
The recent trend indicates the P/E has rebounded into the mid‑single digits compared with the low single-digit readings in 2023–2024. The most recent quarterly P/E ratio was 3.7x.
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.