What Happened?

Shares of semiconductor equipment maker Lam Research (NASDAQ:LRCX) jumped 8.5% in the afternoon session after the company reported impressive fourth-quarter results and provided revenue and EPS guidance for the next quarter, which blew past analysts' expectations. This quarter's revenue and EPS outperformed Wall Street's estimates. Overall, we think this was a decent quarter, with some key metrics above expectations.

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What The Market Is Telling Us

Lam Research’s shares are very volatile and have had 20 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The biggest move we wrote about over the last year was 4 months ago when the stock gained 7.5% on the news that semiconductor stocks, especially the memory chip manufacturers, surged after Micron reported impressive fourth-quarter earnings. Micron beat across most of the key metrics we track, including revenue, operating profit, and EPS. Notably, the company recorded a whopping 894% revenue growth compared to the previous year, showing that the AI party is still ongoing. Micron attributed the outperformance to the growing demand for memory chips that power generative AI applications. 

Looking ahead, Micron provided strong sales and profitability guidance for the next quarter, which exceeded Wall Street's expectations. Overall, the result highlights the abundant growth opportunities for chip makers with technologies to accelerate the booming AI trend.

Lam Research is up 11.1% since the beginning of the year, but at $80.49 per share, it is still trading 28.6% below its 52-week high of $112.73 from July 2024. Investors who bought $1,000 worth of Lam Research’s shares 5 years ago would now be looking at an investment worth $2,589.

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