Shares of Lam Research (LRCX) tumbled 5.49% in pre-market trading on Thursday, despite the semiconductor equipment manufacturer reporting better-than-expected fourth-quarter results. The significant drop comes as investors grapple with concerns about the company's long-term growth prospects, overshadowing its current strong performance.

Lam Research delivered impressive Q4 numbers, with non-GAAP earnings per share of $1.33, surpassing analysts' expectations of $1.21. Revenue for the quarter reached $5.17 billion, up 33.6% year-over-year and exceeding the $5 billion forecast. The company's Q1 guidance also topped estimates, projecting EPS of $1.20 (plus or minus $0.10) on revenue of $5.20 billion (plus or minus $300 million).

However, the positive financial results were overshadowed by Summit Insights' downgrade of Lam Research from Buy to Hold. The firm cited expectations of moderating wafer fab equipment (WFE) spending in 2026 as the primary reason for the downgrade. This outlook appears to have sparked investor concerns about the company's long-term growth trajectory, despite its current strong performance. The market's reaction highlights the forward-looking nature of stock valuations, with investors weighing future challenges against present success.