Financial Trends -- 8.8/10

Lam Research delivered a record CY2025 with revenue of $20.6B (+27% YoY), driven by the strongest WFE upcycle in industry history. Non-GAAP operating margins expanded to 34-35%, reaching post-Novellus highs ahead of the Investor Day model. EPS growth of +39.6% YoY (CQ4 2025) reflects both operating leverage and aggressive buybacks reducing shares 3.2% over 5 quarters. FCF of $6.2B annualized (FY2026H1) underpins a capital return program that returned 85% of FCF in CY2025. Revenue has grown 10 consecutive quarters with all three device segments expanding. Weight: 25%

CY2025 Revenue

$20.6B

+27% YoY -- record year, 10 consecutive quarters of growth

Non-GAAP EPS (CQ4 2025)

$1.27

+39.6% YoY -- operating leverage + buybacks

Non-GAAP Op Margin

34.3%

Post-Novellus high -- ahead of Investor Day model

FCF (Annualized)

$6.2B

FY2026H1 cumulative -- FCF/Rev ~29%

Quarterly Revenue and Margins (Non-GAAP)

Metric	CY24Q2	CY24Q3	CY24Q4	CY25Q1	CY25Q2	CY25Q3	CY25Q4
Revenue ($B)	$3.87B	$4.17B	$4.38B	$4.72B	$5.17B	$5.32B	$5.34B
Gross Margin	48.5%	48.2%	47.5%	49.0%	50.3%	50.6%	49.7%
Op Margin	30.7%	30.9%	30.7%	32.8%	34.4%	35.0%	34.3%
EPS (post-split)	—	$0.86	$0.91	$1.04	$1.33	$1.26	$1.27

Key trends

Revenue grew from $3.87B (CY24Q2) to $5.34B (CY25Q4), a 38% increase over 7 quarters. YoY growth of +22.1% in CQ4 2025 reflects broad-based demand across foundry, memory, and advanced packaging
Gross margin expanded from 47.5% trough (CY24Q4) to 50.6% peak (CY25Q3), settling at 49.7% in CQ4 2025. The +220bps YoY improvement reflects favorable mix and Malaysia manufacturing efficiency
Operating margin expanded 360bps YoY to 34.3% in CQ4 2025, already hitting the 34-35% Investor Day target at a lower revenue run rate than modeled ($25-27B). Management acknowledged needing to update the model
EPS grew +39.6% YoY to $1.27 in CQ4 2025, outpacing revenue growth due to margin expansion and share count reduction (1,262M vs. 1,291M shares, -2.2% YoY)

Revenue Mix: Systems vs. CSBG

Metric	CY24Q2	CY24Q3	CY24Q4	CY25Q1	CY25Q2	CY25Q3	CY25Q4
Systems ($B)	$2.17B	$2.39B	$2.63B	$3.04B	$3.44B	$3.55B	$3.36B
CSBG ($B)	$1.70B	$1.78B	$1.75B	$1.68B	$1.73B	$1.78B	$1.99B

Key trends

Systems revenue grew +27.9% YoY to $3.36B in CQ4 2025, down sequentially from the $3.55B peak in CQ3 2025. The decline is mix-related (less memory, more foundry) rather than demand weakness
CSBG hit a record $1.99B in CQ4 2025 (+13.5% YoY), benefiting from the installed base crossing 100K chambers. Full CY2025 CSBG was a record $7.2B. Management guides high-single-digit to low-double-digit CAGR
Mix shift: Systems as a share of total revenue rose from 56% in CY24Q2 to 63% in CQ4 2025, reflecting the WFE upcycle. CSBG provides counter-cyclical stability and recurring margin accretion through Equipment Intelligence and Dextro cobots

System Revenue by End Market

Metric	CY23Q4	CY24Q1	CY24Q3	CY24Q4	CY25Q1	CY25Q2	CY25Q3	CY25Q4
Memory	48%	44%	35%	50%	43%	—	34%	34%
Foundry	38%	44%	41%	35%	48%	—	60%	59%
Logic/IDM	14%	12%	24%	15%	9%	—	6%	7%

Key trends

Foundry surged from 38% (CY23Q4) to 59% (CY25Q4), becoming the dominant end market. This reflects GAA ramps at leading-edge foundries and advanced packaging buildouts for AI accelerators
Memory declined from 48% to 34% over the same period (-16pp), though absolute memory Systems dollars remained healthy. The percentage decline reflects foundry growing faster, not memory shrinking
Logic/IDM compressed to just 7% in CQ4 2025, down from 14% in CY23Q4. Intel restructuring and broader IDM spending caution are headwinds

Memory Sub-Mix: DRAM vs. NVM (NAND)

Metric	CY23Q4	CY24Q1	CY24Q2	CY24Q3	CY24Q4	CY25Q1	CY25Q2	CY25Q3	CY25Q4
DRAM (% of Rev)	31%	23%	19%	24%	26%	23%	14%	16%	23%
NVM/NAND (% of Rev)	17%	21%	17%	11%	24%	20%	27%	18%	11%

Key trends

DRAM has been volatile (31% to 14% to 23%), reflecting lumpy HBM and 3D DRAM spending patterns. CQ4 2025 at 23% (-3pp YoY) is consistent with HBM3e to HBM4 transition timing
NVM/NAND dropped to 11% in CQ4 2025 (-13pp YoY) after peaking at 27% in CQ2 2025. The swing reflects the upgrade cycle being inherently lumpy as customers phase investment. The $40B+ NAND upgrade opportunity is tracking ahead of schedule with CY2025 upgrade revenue up 90%+ YoY
New NAND use case: Non-volatile context memory for large-scale AI inference. Management estimates every 2-3M accelerators sold adds ~1pp to NAND bit demand growth

Annual Financial Summary (CY2021-CY2025)

Metric	CY2021	CY2022	CY2023	CY2024	CY2025
Revenue ($B)	$14.6B	$17.2B	$17.4B	$14.9B	$18.4B
GAAP Gross Margin	46.5%	45.7%	44.6%	47.3%	48.7%
GAAP Op Margin	30.6%	31.2%	29.7%	28.6%	32.0%
FCF ($B)	—	—	—	$4.3B	$5.4B

Note: CY2025 = FY2025 (fiscal year ending June 2025). Calendar 2025 revenue (Jan-Dec) was a record $20.6B per management commentary (+27% YoY). Annual figures above reflect fiscal-year reporting periods.

Key trends

Revenue recovered strongly from the CY2024 trough of $14.9B to $18.4B in CY2025 (FY basis), a +23.7% rebound. On a calendar-year basis, CY2025 was a record $20.6B
GAAP gross margin expanded 140bps to 48.7% in CY2025, approaching the Non-GAAP quarterly highs of 50%+. Malaysia manufacturing efficiency is the key structural driver
GAAP operating margin expanded 340bps to 32.0% in CY2025, the highest since CY2022. R&D spending is growing but being more than offset by revenue scale
FCF grew +27.2% to $5.4B in FY2025, with FCF/revenue of ~29%. Capital allocation returned 85% of FCF through buybacks and dividends

Free Cash Flow (Semi-Annual / Annual Reporting Periods)

Metric	CY23Q4	CY24Q1	CY24Q3	CY24Q4	CY25Q1	CY25Q4
Operating CF ($B)	$5.25B	$1.38B	$1.57B	$4.56B	$1.31B	$7.12B
CapEx ($M)	($390M)	($104M)	($111M)	($503M)	($288M)	($906M)
FCF ($B)	$4.86B	$1.28B	$1.46B	$4.05B	$1.02B	$6.22B

Note: FCF data is reported on a semi-annual or annual fiscal basis in Daloopa. CY25Q4 column represents FY2026H1 cumulative (Jul-Dec 2025).

Key trends

FCF surged to $6.22B in FY2026H1 (CY25Q4 column), up +53.3% YoY, implying an annualized run rate of ~$12.4B. Even conservatively, trailing-twelve-month FCF is well above $6B
CapEx is rising meaningfully ($906M in FY2026H1 vs. $503M prior year) as Lam invests in manufacturing capacity, particularly the Malaysia facility. CapEx intensity remains modest at ~5% of revenue
Operating cash flow of $7.12B in FY2026H1 (+56.2% YoY) reflects both higher earnings and favorable working capital dynamics from the revenue ramp

Guidance vs. Actuals (Last 5 Quarters)

Metric	CY24Q4	CY25Q1	CY25Q2	CY25Q3	CY25Q4
Rev Guide Mid	$4.30B	$4.65B	$5.00B	$5.20B	$5.20B
Rev Actual ($B)	$4.38B	$4.72B	$5.17B	$5.32B	$5.34B
Rev Beat %	+1.8%	+1.5%	+3.4%	+2.3%	+2.7%
EPS Guide Mid	$1.00*	$1.00	$1.20	$1.15	$1.15
EPS Actual	$0.91	$1.04	$1.33	$1.26	$1.27
EPS Beat %	Note*	+4.0%	+10.8%	+9.6%	+10.4%

*CY24Q4 EPS: Guide was pre-split ($1.00), actual is post-split ($0.91). Not directly comparable. All subsequent quarters are post-split comparisons.

Key trends

Revenue beats have been consistent at +1.5% to +3.4% above guidance midpoint every quarter for at least 5 consecutive quarters. The beat magnitude is widening
EPS beats are even more impressive at +4.0% to +10.8% above guide, reflecting not just revenue upside but margin outperformance. Gross margin and operating margin consistently hit the high end of guided ranges
Pattern: Management guides conservatively, then delivers at or above the high end. This is a reliable guide-raise-beat cadence that the Street has begun to price in

Consensus Estimates

Metric	FY2026E (Jun 2026)	FY2027E (Jun 2027)
Revenue	~$28.5B	~$35.5B
EPS	~$5.30	~$7.00
Analyst Rating	Strong Buy (19 Buy / 3 Hold / 0 Sell)	--

Key trends

FY2026E revenue of ~$28.5B implies +55% growth vs. FY2025 ($18.4B), driven by the WFE upcycle to ~$135B. Second-half weighted year
FY2027E revenue of ~$35.5B implies +25% growth, consistent with management commentary that the multi-year AI buildout continues into CY2027+
EPS growth from ~$5.30 to ~$7.00 (+32%) reflects continued operating leverage, margin expansion, and buyback-driven share count reduction
Consensus is unanimous bullish: 19 Buy / 3 Hold / 0 Sell. Average analyst target ~$248 (vs. current $218.44 = +14% upside)

Score rationale

Lam Research delivered exceptional financial performance across every metric in CY2025. Revenue grew 10 consecutive quarters to a record $20.6B (+27% YoY on a calendar basis). Non-GAAP operating margins expanded to 34-35%, reaching the Investor Day target of 34-35% at a revenue run rate well below the modeled $25-27B threshold -- meaning the margin framework needs to be revised upward. EPS growth of +39.6% YoY in CQ4 2025 reflects the combined power of revenue growth, margin expansion, and disciplined capital return.

FCF generation is outstanding at ~$6.2B annualized (FY2026H1), representing ~29% FCF/revenue. The company returned 85% of FCF in CY2025 through buybacks ($4.1B) and dividends ($1.2B), reducing diluted shares by 3.2% over 5 quarters. The installed base crossing 100K chambers supports a durable CSBG revenue stream of $7.2B annually.

The guidance track record is exemplary: 5 consecutive quarters of revenue and EPS beats, with EPS beat magnitude widening from +4% to +10%. Management consistently guides conservatively and over-delivers.

Minor deductions: (1) CQ4 2025 gross margin of 49.7% stepped down from the 50.6% CQ3 peak, and CQ1 2026 is guided at 49% +/- 1pp, suggesting mix headwinds from China normalization; (2) Memory sub-mix is volatile quarter-to-quarter, making near-term revenue composition harder to predict; (3) Systems revenue declined sequentially in CQ4 2025 ($3.36B vs. $3.55B), though this appears mix-related rather than demand-driven.

Score: 8.8/10 -- Record revenue, expanding margins, exceptional FCF generation, and a flawless guidance track record. Deducted modestly for gross margin stepping down from peaks and volatile quarterly memory mix.

Data sourced from Daloopa, company filings, and earnings transcripts.