Are You Overpaying For Lam Research Stock Versus Its Rivals?

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Lam Research (LRCX) grew revenue faster than four of the five semiconductor equipment and materials companies in its peer group, and it earned a wider operating margin than four of them. Yet its price-to-earnings multiple ranks only third highest of the six, in the middle of the group. So what does that middle price buy next to the rival priced closest to Lam?

Lam Research Grows Faster At A Similar Price

Lam Research trades at 32.9 times earnings over its latest four fiscal quarters, close to the 31.9 times multiple at Applied Materials (AMAT). For that similar price, Lam grew revenue 33.4% over those quarters, while Applied Materials grew 7.8% over its own latest four, which ended in July 2026. Lam also kept more of its sales as operating profit, recording a 37.0% margin against 31.1% for Applied Materials. By these figures, a buyer of Lam pays roughly Applied Materials’ multiple for much faster growth.

Applied Materials stock delivered a higher total return over the year to November 10, 2026, returning 62.8% against 40.2% for Lam. Within this group, only Teradyne (TER) grew faster than Lam, and only KLA (KLAC) earned a wider margin. At the same time, KLA and Entegris (ENTG) both trade at higher multiples than Lam with slower growth.

How Lam Research Earns Its Faster Growth

Lam sells deposition and etch tools, the machines chip makers use to lay down and cut away layers of a semiconductor. During the company’s October 21, 2026 call, management said increasingly complex chip designs have expanded the share of chip makers’ equipment spending that Lam’s tools can address. Management also expects 2026 to mark Lam’s third straight year of growing faster than that overall spending.

Memory chip makers stepped up their buying. Lam’s systems revenue from memory customers rose 120% from a year earlier in the September quarter, its fiscal Q1 2027, according to management. The company also earns money after the initial sale. Its Customer Support Business Group, which sells upgrades, spares, and services, posted record revenue of nearly $2.5 billion in that quarter. Management expects the group’s revenue to grow more than 30% in calendar 2026.

Lam’s growth has also accelerated. Revenue rose 54.4% from a year earlier in the September quarter, up from 30.0% in the June quarter.

What Lam Research Expects For Its December Quarter

Management forecast revenue of $8.6 billion, plus or minus $400 million, for the December quarter, fiscal Q2 2027. The midpoint of that forecast sits above the $8.22 billion Lam reported for the September quarter.

One risk is that September’s revenue leaned more on China. China contributed 35% of Lam’s revenue in the September quarter, up from 26% in the June quarter, and management expects China’s share to be significantly lower in December. Management added that the December guide would have been a bit higher without near-term supply chain constraints.

Lam’s price, close to Applied Materials’ despite much faster growth, gives Lam little credit for its lead in growth. So far, Lam’s growth has quickened rather than slowed. Lam is expected to report its December quarter in January 2027. The numbers to watch then are revenue growth from a year earlier and China’s share of revenue.

Not Sure Lam Research Is Worth It At This Price?

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