Lam Research LRCX reported second-quarter fiscal 2025 results, wherein both top and bottom lines surpassed the Zacks Consensus Estimate.

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LRCX reported second-quarter fiscal 2025 non-GAAP earnings of 91 cents per share, which beat the Zacks Consensus Estimate by 4.6%. The bottom line increased 7% on a year-over-year basis, primarily driven by higher revenues due to robust demand in DRAM and Foundry Logic and disciplined cost and operational management.

In the second quarter of fiscal 2025, LRCX reported revenues of $4.38 billion, which surpassed the consensus mark by 1.6%. The top line increased 5% from the year-ago quarter’s $4.17 billion.

Buoyed by better-than-expected second-quarter performance, Lam Research has released a strong outlook for the third quarter of fiscal 2025. LRCX stock has underperformed the Zacks Electronics - Semiconductors industry. In the past year, LRCX shares have lost 8.9% against the industry’s return of 42.9%. We expect that the company’s overwhelming quarterly performance, along with its upbeat outlook, will help LRCX stock to recover.

LRCX’s Segment in Details

Lam Research’s System revenues were $2.63 billion (60% of the total revenues), up 9.7% from the previous quarter. System revenues grew 14.2% year over year. The reported figure missed the Zacks Consensus Estimate of $2.69 billion.

In the Customer Support Business Group, revenues for the reported quarter were $1.75 billion (40% of the total revenues), down 1.4% from the previous quarter and up 20% year over year. The figure beat the consensus mark of $1.61 billion.

LRCX’s Regions in Detail

China, Korea and Taiwan accounted for 31%, 25% and 17% of Lam Research’s total revenues, respectively, for the fiscal second quarter. Japan, Southeast Asia, the United States and Europe accounted for 8%, 7%, 9% and 3% of total revenues, respectively.

Operating Details of LRCX

The non-GAAP gross margin was 47.5%, which contracted 70 basis points (bps) from the previous quarter.

Non-GAAP operating expenses were $735 million, up 1.8% from the previous quarter. The non-GAAP operating margin was 30.7%, contracting 20 bps from the previous quarter’s 30.9%.

LRCX’s Balance Sheet & Cash Flow

As of Dec. 29, 2024, cash and cash equivalents were $5.67 billion compared with $6.08 billion as of Sept. 29, 2024.

Cash flow from operating activities was $742 million for the reported quarter, down from $1.57 billion in the previous quarter.

In the reported quarter, Lam Research paid out dividends of $297.6 million and repurchased shares worth $650 million.

LRCX Provides Strong Guidance

For third-quarter fiscal 2025, LRCX expects its revenues to be $4.65 billion (+/- $300 million). The Zacks Consensus Estimate for the same is pegged at $4.32 billion.

The non-GAAP gross margin is projected at 48% (+/-1%), whereas the non-GAAP operating margin is expected to be 32% (+/-1%).

Non-GAAP earnings per share are projected to be $1 (+/- 10 cents) on a diluted share count of 1.3 billion. The Zacks Consensus Estimate for the same is pinned at 87 cents per share.

Zacks Rank & Stocks to Consider

Currently, LRCX carries a Zacks Rank #4 (Sell).

Bill Holdings BILL, Marvell Technology MRVL and Gitlab GTLB are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector.

Bill Holdings, Marvell Technology and Gitlab sport a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus mark for BILL’s 2025 earnings has been revised upward by 4 cents to $1.81 per share over the past 60 days, indicating a 13% year-over-year increase. BILL shares have gained 24.1% in the past year.

The consensus mark for MRVL’s 2025 earnings has been revised downward by 10 cents to $1.56 per share over the past 60 days, indicating a 3.31% year-over-year increase. MRVL shares have risen 52.3% in the past year.

The consensus mark for GTLB’s 2025 earnings has been revised upward by 17 cents to 63 cents per share over the past 60 days, indicating a 215% year-over-year increase. GTLB shares have lost 2.2% in the past year.

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