Management Quality -- 8.5/10
CEO Tim Archer has led Lam Research since 2018, navigating the full WFE cycle from peak
to trough and back to record highs. Management has beaten revenue and EPS guidance midpoints
for 5 consecutive quarters, returned 85% of FCF to shareholders, and reduced the share count
by ~3.2% over 5 quarters. The Investor Day roadmap to double revenue and profit over five
years is already running ahead of schedule with operating margins hitting 34-35% well before
the model implied.
Weight: 20%
CEO Tenure
Since 2018
Timothy Archer, full-cycle leader
Guidance Beat Streak
5/5 Quarters
Rev and EPS above midpoint every Q
FCF Return to Shareholders
85% of FCF
Within 75-100% target range
Share Count Decline
~3.2% in 5Q
1,304M to 1,262M diluted
WFE Guidance Accuracy
| Year | WFE Guide | Actual | Verdict |
|---|---|---|---|
| CY2024 | Mid-$90B range | Mid-$90B | Accurate |
| CY2025 | $100B (raised to $105B mid-year) | ~$110B | Conservative initial, accurate direction |
| CY2026 | ~$135B (+23% YoY) | TBD | Bold call backed by clean room constraints |
Source: Earnings call transcripts FY2025-FY2026.
Promise Tracking
| Promise | Result | Status |
|---|---|---|
| Investor Day: Double revenue and profit over 5 years (Feb 2025) | CY2025 record $20.6B rev, up 27% YoY | ON TRACK |
| Op margin model: 34-35% at $25-27B revenue | Already hitting 34-35% at ~$21B run rate -- ahead of plan | BEAT |
| SAM expansion: low-30s to high-30s % of WFE | Progressed to mid-30s in CY2025, gained 1+ pp share | ON TRACK |
| CSBG: Installed base to 100K chambers | Crossed 100K in CY2025; CSBG record $7.2B | DELIVERED |
| Capital return: 75-100% of FCF | Returned 85% of FCF in CY2025; ~39M shares repurchased | DELIVERED |
Source: Investor Day (Feb 2025), FY2025-FY2026 earnings transcripts.
Guidance vs. Actuals (Last 5 Quarters)
| Quarter | Rev Guide | Rev Actual | Rev Beat | EPS Guide | EPS Actual | EPS Beat |
|---|---|---|---|---|---|---|
| CY24Q4 (FY25Q2) | $4.30B | $4.38B | +1.8% | $1.00 | $0.91 | Note* |
| CY25Q1 (FY25Q3) | $4.65B | $4.72B | +1.5% | $1.00 | $1.04 | +4.0% |
| CY25Q2 (FY25Q4) | $5.00B | $5.17B | +3.4% | $1.20 | $1.33 | +10.8% |
| CY25Q3 (FY26Q1) | $5.20B | $5.32B | +2.3% | $1.15 | $1.26 | +9.6% |
| CY25Q4 (FY26Q2) | $5.20B | $5.34B | +2.7% | $1.15 | $1.27 | +10.4% |
*CY24Q4 EPS: pre-split guide vs. post-split actual makes direct comparison misleading.
Gross margin and operating margin consistently at or above high end of guided ranges.
Source: Daloopa, earnings call transcripts.
Capital Allocation
| Metric | CY24Q2 | CY24Q3 | CY24Q4 | CY25Q1 | CY25Q2 | CY25Q3 | CY25Q4 | YoY |
|---|---|---|---|---|---|---|---|---|
| Buybacks ($M) | $374 | -- | $650 | $347 | $1,307 | $990 | $1,442 | +122% |
| Dividends ($M) | $261 | $261 | $298 | $296 | $295 | $292 | $328 | +10% |
CY2025 buybacks totaled ~39M shares at an average price of ~$104/share. Dividends increased
from $0.23 to $0.26 per share in 2025, consistent with a progressive dividend policy.
Diluted Share Count (Declining)
| Quarter | CY24Q3 | CY24Q4 | CY25Q1 | CY25Q2 | CY25Q3 | CY25Q4 |
|---|---|---|---|---|---|---|
| Shares (M) | 1,304 | 1,291 | 1,288 | 1,277 | 1,269 | 1,262 |
Steady decline of ~3.2% over 5 quarters through aggressive buybacks. Management targets
continued share count reduction, funded by strong FCF generation (~$6.2B annualized as of
FY2026H1).
Score Rationale
8.5/10. CEO Tim Archer (since 2018) has navigated the full WFE cycle and
delivered record results in the upcycle. The 5/5 guidance beat streak, 85% FCF return rate,
and steady share count reduction demonstrate disciplined capital allocation. The Investor Day
operating margin target is already being achieved ahead of schedule. SAM expansion and CSBG
installed base milestones are on track. Minor deductions: (1) gross margin guided slightly
lower for CY26Q3 on customer mix headwinds, showing some sensitivity to China normalization;
(2) WFE guidance has tended to start conservative and ratchet up, which is a positive pattern
but makes initial calls less informative. Not a 9 because the cycle is still early and the
multi-year doubling promise remains largely ahead of the team.
Data sourced from Daloopa, earnings call transcripts, and company disclosures.