Executive Summary
Lam Research delivered a solid QQ4 2025, with revenue of $5.171 billion, marking a year-over-year increase of approximately 24% and flat sequential growth. The company sustained a strong gross margin of about 50.1%, with operating margin near 33.7% and net margin of ~33.3%, underscoring operational efficiency and favorable product mix in a stabilizing semiconductor equipment cycle. Net income reached $1.72 billion and earnings per share (diluted) $1.35, reflecting disciplined cost management and favorable mix. Free cash flow was robust at ~$2.382 billion, supporting a healthy balance sheet with net cash position of roughly $1.91 billion despite ongoing capital allocation activity. The liquidity profile remains ample, with current and quick ratios of 2.21x and 1.55x respectively, and a debt burden that is modest relative to cash generation (net debt around -$1.91 billion).
Looking forward, Lam benefits from a durable demand environment for leading-edge semiconductor manufacturing equipment, driven by foundry and logic capex cycles. While explicit quarterly guidance was not provided in the materials, the quarter’s strength and cash generation imply potential for continued above-cycle profitability if demand remains stable and supply chains stay favorable. Investors should monitor end-market capex trends, memory versus logic demand splits, FX movements, and semiconductor equipment supply dynamics. Overall, Lam presents a compelling combination of high margin profitability, strong cash flow, and a solid balance sheet, albeit within a cyclical industry that warrants attention to capex cycles and competitive intensity.
Key Performance Indicators
Key Insights
Revenue: $5.171B; YoY growth: +24.1%; QoQ: 0.0%
Gross Profit: $2.590B; Gross Margin: 50.08%; YoY Gross Profit growth: +29.3%; QoQ: 0.0%
Operating Income: $1.741B; Operating Margin: 33.67%; YoY: +37.7%; QoQ: 0.0%
Net Income: $1.720B; Net Margin: 33.26%; YoY: +54.1%; QoQ: 0.0%
EPS (Diluted): $1.35; YoY: +56.98%; QoQ: 0.0%
EBITDA: $1.877B; EBITDA Margin: ~36.3%
Cash Flow from Operations: $2.554B; Free Cash Flow: $2.382B; FCF per Share: $1.87; Operating Cash Flow per Share: $2.00; Dividends Payout R...
Financial Highlights
Revenue: $5.171B; YoY growth: +24.1%; QoQ: 0.0%
Gross Profit: $2.590B; Gross Margin: 50.08%; YoY Gross Profit growth: +29.3%; QoQ: 0.0%
Operating Income: $1.741B; Operating Margin: 33.67%; YoY: +37.7%; QoQ: 0.0%
Net Income: $1.720B; Net Margin: 33.26%; YoY: +54.1%; QoQ: 0.0%
EPS (Diluted): $1.35; YoY: +56.98%; QoQ: 0.0%
EBITDA: $1.877B; EBITDA Margin: ~36.3%
Cash Flow from Operations: $2.554B; Free Cash Flow: $2.382B; FCF per Share: $1.87; Operating Cash Flow per Share: $2.00; Dividends Payout Ratio: 17.2%
Capital Expenditure: $172.2M; Free Cash Flow Yield: ~46%
Balance Sheet: Cash & Equivalents $6.391B; Total Assets $21.345B; Total Liabilities $11.484B; Total Stockholders’ Equity $9.862B; Debt (Total): $4.485B; Net Debt: -$1.906B (net cash)
Liquidity & Leverage: Current Ratio 2.21x; Quick Ratio 1.55x; Cash Ratio 0.97x; Debt/Equity 0.46x; Interest Coverage ~40.7x; Debt to Capitalization 31.3%
Valuation Signals: P/E ~18x; P/S ~24x; P/B ~12.6x; EV/Revenue ~65x; Price to Free Cash Flow ~52x; Dividend Yield ~0.24%
Operational Efficiency: Asset Turnover 0.242x; Inventory Turns 0.599x; Receivables Turnover 1.531x; DSO ~58.8 days; DIO ~150.2 days; CCC ~209 days
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
5.17B |
24.07% |
0.00% |
| Gross Profit |
2.59B |
29.31% |
0.00% |
| Operating Income |
1.74B |
37.73% |
0.00% |
| Net Income |
1.72B |
54.07% |
0.00% |
| EPS |
1.35 |
56.98% |
0.00% |
Key Financial Ratios
operatingProfitMargin
33.7%
operatingCashFlowPerShare
$2
freeCashFlowPerShare
$1.87
dividendPayoutRatio
17.2%
Management Commentary
Note: The earnings transcript data were not provided in the supplied materials, so direct management quotes could not be extracted. Key thematic expectations from Lam’s QQ4 2025 frame (based on the numerical results and typical management commentary in this segment) would typically include: 1) Volume/Mix and Margin Discipline: Management usually emphasizes strong gross margins (~50%) driven by favorable product mix and productivity improvements; 2) End-Market Demand: Discussion around WFE demand drivers in foundry/logic capex and potential cyclicality; 3) Capital Allocation: Focus on returning capital via buybacks and dividends alongside disciplined investment in R&D and capacity expansion; 4) Supply Chain and Execution: Commentary on lead times, supplier performance, and inventory management; 5) Long-Term Portfolio Positioning: Updates on product family mix (ALD, CVD, etch, and metrology segments) and technology leadership.
Given the absence of a supplied transcript, the above themes reflect typical management priorities for Lam during positive-margin quarters in a stabilized WFE cycle.
Forward Guidance
Explicit quarterly or annual forward guidance was not included in the provided data. Based on the QQ4 2025 results and the broader industry backdrop, a qualitative outlook can be framed as follows:
- Revenue trajectory: With YoY growth of ~24% in Q4 and a healthy backlog implied by continued high-margin execution, Lam could see sustained demand in the near term if semiconductor capex remains robust, particularly in leading-edge nodes. However, cyclical sensitivity to foundry spend means investors should expect potential volatility driven by memory/logic demand cycles and manufacturing utilization.
- Margin sustainability: Gross margin around 50% and strong operating leverage support earnings stability. Cost discipline and product mix optimization should cushion margins against volume fluctuations, though any supply chain disruptions or materials cost inflation could modestly pressure margins.
- Cash flow and capital allocation: Lam’s strong free cash flow generation (~$2.38B) supports a conservative balance sheet with net cash, enabling continued buybacks and opportunistic investments in R&D and capacity planning.
- Key risk factors to monitor: capex cycles in peer semiconductors, FX headwinds/tailwinds, supply chain resilience, and competitive landscape (e.g., capacity expansions by ALD/CVD and etch solutions). Investors should track quarterly commentary around lead times, order backlogs, and utilization trends at leading customers.
Overall, the investment path hinges on stabilizing macro demand for semiconductor equipment, Lam’s ability to maintain mid-to-high single-digit revenue growth in forthcoming quarters, and the sustainability of its margin framework amid cyclical volatility.