Zacks Investment Research has upgraded Lam Research to a Zacks Rank #1 (Strong Buy) following a sustained upward revision in earnings estimates. Over the past month, 12 analyst price targets have been raised, reflecting growing confidence in the company’s ability to capitalize on semiconductor capital equipment demand. Historically, stocks rated #1 by Zacks have achieved an average annual return of 23.90% since 1988, more than doubling the S&P 500’s performance over the same period.

For the quarter ended December 2025, Lam Research is projected to report non-GAAP earnings per share of $6.75, representing a 16% increase year-over-year. Revenue is expected to come in at approximately $5.4 billion, up 12% from the prior year period. These estimates incorporate strong orders for etch and deposition tools, with backlog levels rising by nearly 18% sequentially. Analysts note that Lam’s gross margin could expand by 150 basis points to 50.5%, driven by higher factory utilization and operating leverage.

Lam Research continues to benefit from robust industry trends, including a 25% year-over-year increase in capital spending on AI logic chip manufacturing and a 20% rise in DRAM wafer starts. Leading memory customers have signaled capacity expansions for next-generation node geometries, while major foundries are locking in multi-year contracts for high-NA lithography support. Management has indicated that tool shipments for advanced logic processes represent nearly 40% of total revenue, a significant shift from 28% a year ago.

Wall Street strategists are focusing on Lam Research’s equipment utilization rate, which climbed to 92% in November, and R&D investment, which increased by 10% year-over-year to $900 million. The company’s operating cash flow is forecasted to exceed $2.2 billion for the quarter, supporting a dividend yield of 1.5% and $3.0 billion in share repurchases authorized through fiscal 2026. Analysts highlight that Lam’s book-to-bill ratio remains above parity at 1.05, underscoring sustained order intake strength.