Lam Research (NASDAQ: LRCX) makes the machines chipmakers use to etch and deposit the microscopic layers of a semiconductor. It has never been a household name. But it got investors’ attention on Thursday.
Shares of the semiconductor equipment specialist jumped 18% to about $298, the stock’s biggest one-day gain since April 2025. The move followed record results for Lam’s fiscal fourth quarter of 2026 (the three months ended June 28) and guidance for a much bigger quarter ahead.
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A pop like that is a good excuse to ask the long-term question precisely: What would a $10,000 investment in Lam Research made 10 years ago be worth today?
About $320,000, before counting dividends.
Image source: Getty Images.
How $10,000 became $320,000
At the end of August 2016, Lam’s split-adjusted share price was about $9.30. The same share fetches about $298 as of this writing, about 32 times as much. That’s enough to turn $10,000 into roughly $320,000, before counting the dividends Lam has paid along the way.
With those payouts reinvested, the total climbs to about $365,000. And it’s many times what the broad market returned over the same stretch.
The engine behind the return is the chip industry’s growing appetite for manufacturing equipment, and the artificial intelligence (AI) build-out has lifted that appetite to record levels. In fiscal 2026, Lam’s revenue grew 26% year over year to $23.2 billion, an acceleration from fiscal 2025’s growth of about 24%. Net income rose 36% to about $7.3 billion, and earnings per share of $5.76 grew 39% from $4.15.
Showing how strong demand has become, Lam’s fiscal fourth-quarter revenue rose 30% year over year to $6.72 billion, up from $5.17 billion in the year-ago period. Earnings per share of $1.81 grew 34% year over year. Even more, the company’s non-GAAP (adjusted) gross margin reached 52% of revenue in fiscal Q4, expanding from 49.9% in the March quarter.
“Lam delivered record revenue, operating margin and earnings per share in the June quarter as AI-driven demand continues to reshape the semiconductor industry,” said CEO Tim Archer in the earnings release.
And management expects more. Guidance calls for September-quarter revenue of $8.1 billion, plus or minus $400 million, about 21% above fiscal Q4’s record. Earnings per share are expected to be about $2.15 at the guidance midpoint, up from fiscal Q4’s $1.81.
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To put that guided quarter in perspective, it’s more than double the roughly $3.7 billion Lam averaged per quarter in fiscal 2024, just two years ago.
It’s worth noting, too, that Lam produces plenty of cash along the way. The company generated $1.46 billion of operating cash flow in fiscal Q4, comfortably covering the $325 million it paid in dividends and the $247 million it spent buying back stock. Lam also ended the quarter with $5.58 billion in cash and equivalents.
The next decade starts from a different price
Before extrapolating that 32-fold return forward, I’d remember what the ride looked like. Zoom out, and chip equipment spending is cyclical — Lam’s sales can still shrink when its customers pull back. As recently as fiscal 2024, revenue fell about 14% to $14.9 billion.
Today’s buyer also starts from a very different price. Shares trade at about 52 times the $5.76 per share Lam earned in fiscal 2026. Even measured against the September quarter’s guided earnings (an annualized rate of about $8.60 per share), the stock goes for about 35 times.
However, that forward figure assumes the boom keeps building. It’s a premium price for a business whose sales fell by double digits as recently as two years ago.
Sure, AI-driven demand could keep equipment orders growing for years to come. But an investor buying now is paying up front for that outcome, in a record year, at a record margin.
So, would I put fresh money into Lam Research after a week like this? I don’t think so. The stock may well keep running, and the business is arguably executing as well as it ever has. And I think shareholders who already own it have little reason to sell.
Ultimately, though, chasing a stock right after an 18% jump isn’t something I’m comfortable doing, especially in a cyclical industry. I’d keep Lam on my watch list and wait for a better entry point.
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Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Lam Research. The Motley Fool has a disclosure policy.
What a $10,000 Investment in Lam Research 10 Years Ago Would Be Worth Today was originally published by The Motley Fool
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