Lam Research Corporation (LRCX) Income Statement

The sequential revenue progression from $3.8B in 2024Q3 to $6.7B in 2026Q4 shows a clear acceleration, with growth rates climbing from negative to 30% over ten quarters. This suggests that AI-driven demand for advanced memory and logic nodes is more than offsetting cyclicality, as evidenced by the consistent quarter-over-quarter increases. The durability of this growth appears tied to the technology treadmill in 3D NAND and GAA architectures, which may sustain demand even if broader semiconductor capex softens.

The gross margin trajectory shows consistent improvement, with the most recent quarter hitting 51.7%, above the peer average of around 50%. This expansion likely reflects a shift toward more complex etch and deposition tools, which command premium pricing, and possibly a higher mix of service revenue. However, the sustainability of this margin level may be challenged by potential under-absorption during any demand downturn, as seen in historical cycles.

The operating margin expansion of nearly 950 basis points over the period outpaced gross margin gains, indicating that SG&A and R&D costs are scaling slower than revenue. R&D as a percentage of revenue declined from 13.5% in 2024Q3 to 9.6% in 2026Q4, while SG&A similarly dropped, suggesting efficient cost control despite increased absolute spending. This leverage appears structural, driven by the high fixed-cost nature of the business, and may continue if revenue growth persists.

The absolute increase in R&D and SG&A reflects investment in next-generation technologies, but the declining percentage of revenue indicates that the company is leveraging its cost base effectively. R&D intensity remains high, which is critical for maintaining the moat in HAR etch, but the efficiency gains suggest that management is balancing innovation with profitability. Investors should monitor whether this efficiency can be maintained as the company scales into new markets.