Is Lam Research Stock’s Fall A Bargain Or A Warning?
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Lam Research (LRCX) stock fell 34.5% from October 2 to November 2, 2026, while the S&P 500 lost 2.3%. Buyers have an argument for stepping in, as management called the September quarter Lam’s fifth consecutive quarter of record revenue. For this fall to be a bargain, memory chip makers must continue buying Lam’s equipment, and the current decline must play out like earlier ones. So what happened to Lam’s shares after its earlier falls of this size?
How Lam Research Stock Did After Earlier Falls
Since 2010, Lam has recorded three earlier falls of more than 30% in 30 trading days. In the two instances with a full year of history behind them, the stock traded far higher a year later. The shares were up 183% a year after the drop of March 18, 2020, and up 349% a year after the drop of April 4, 2025.
Investors captured those gains with minimal further losses. In the year following the 2020 drop, the lowest close was 3.2% below the dip-day price, and the shares never closed below it after the 2025 drop. The stock reached its highest price about a year later in both cases, peaking 348 days after the 2020 drop and 371 days after the 2025 drop.
Two results offer a limited history, and both occurred alongside broader market declines. The S&P 500 ETF lost 27.0% over the 2020 drop and 16.0% over the 2025 drop. By contrast, the third drop on July 29, 2026, took place while the fund lost only 3.0%. Lam stock traded 4.0% lower 63 trading days later, though that decline remains too recent to evaluate over a full year. Those 63 trading days overlap with the current fall that began October 2.
| Time after a past dip | Past dips with that much time after them | Median LRCX price change |
|---|---|---|
| 21 trading days | 3 | 26.0% |
| 63 trading days | 3 | 63.0% |
| 126 trading days | 2 | 99.5% |
| 252 trading days | 2 | 266.0% |
| Dip date | LRCX price change over the 30 trading days to the dip date | SPY price change over the same days | LRCX price change 252 trading days after the dip date | Highest price in those 252 trading days, against the dip-date price | Calendar days to that highest price | Lowest price in those 252 trading days, against the dip-date price |
|---|---|---|---|---|---|---|
| 2026-07-29 | -35.1% | -3.0% | window not complete | window not complete | window not complete | window not complete |
| 2025-04-04 | -31.1% | -16.0% | 349.0% | 349.5% | 371 | 0% |
| 2020-03-18 | -40.3% | -27.0% | 183.0% | 213.5% | 348 | -3.2% |
| Median of 2 complete windows | – | – | 266.0% | 281.5% | 360 | -1.6% |
Lam Research’s Sales Are Still Climbing
Memory chip makers accounted for much of the buying as Lam’s revenue rose in each of the last four quarters. Fiscal Q1 2027 revenue reached $8.22 billion, up 54.4% from a year earlier. Management said memory systems revenue was up 120% in that quarter compared to the same period in 2025.
The business also retained more of each incoming dollar. Lam converted 40.0% of that quarter’s revenue into operating profit, up from 34.4% a year earlier. Furthermore, management said free cash flow reached a record $3.24 billion.
Management expects the buying to continue. The company guided December-quarter revenue to $8.6 billion, plus or minus $400 million. In its early outlook, management anticipates the industry spending more than $200 billion on chipmaking equipment in 2027, with DRAM leading the growth.
What Are You Paying For Lam Research Stock?
Lam stock trades at a multiple of 33.7 times earnings over the past twelve months, against 22.8 for the S&P 500. A better business may account for part of that premium: Lam’s operating margin over those twelve months stood at 37.0%, compared to 18.6% for the index.
The earnings multiple does not reflect where Lam’s sales will trend next, and management flagged two soft spots. China will account for a meaningfully lower share of revenue in the December quarter, management said, driven by domestic customers in China. Management also said the December-quarter revenue guide would have been a bit higher without some near-term supply chain constraints. If memory chip makers slow their buying as well, you would be paying well above the market’s multiple for earnings that have stopped growing.
So far, the evidence from Lam’s business falls on the bargain side, as sales are still rising and memory chip makers are still buying. The two earlier falls with a full year behind them also ended in large gains, but the broader market fell during both of those periods as well. When Lam reports, which is expected in January 2027, December-quarter revenue against management’s guide will be the number to watch. If you buy now, are you buying a business that is still growing, or a rebound record built on just two complete one-year results?
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