Lam Research (LRCX, Financial) saw a 7% increase following a strong Q2 report, echoing the positive results from ASML (ASML, Financial). The semiconductor equipment supplier exceeded earnings and revenue expectations, issuing optimistic Q3 guidance for the first time in two years.

• In Q2, LRCX posted double-digit adjusted earnings growth to $0.91 and a 16.4% revenue increase to $4.38 billion. Non-GAAP gross margins of 47.5% surpassed the midpoint of prior forecasts, despite a slight 70 bp contraction from Q1 due to an unfavorable customer mix.
• AI significantly contributed to LRCX's performance, countering weak NAND spending. Shipments of gate-all-around and advanced packaging technologies reached over $1.0 billion in 2024, maintaining momentum from the previous quarter.
• LRCX projects WFE spending to rise to approximately $100 billion in 2025, driven by AI's demand for enhanced device performance. The company forecasts shipments to gate-all-around nodes and advanced packaging to exceed $3.0 billion in 2025, a potential 200% year-over-year increase.
• In China, revenue concentration is expected to decline moderately in 2025 compared to 2024. The region accounted for about 31% of total revenues in Q4, down 7 points from Q1. New export restrictions in December impacted LRCX by approximately $700 million, affecting the second half of 2025.

Despite challenges in China, robust global AI demand is offsetting regional revenue normalization. However, geopolitics and volatility in non-AI markets, such as smartphones and PCs, pose risks. LRCX remains nearly 30% below its all-time highs from July.

Strong results from ASML and LRCX set a positive precedent for upcoming reports from peers like KLA Corp (KLAC, Financial), NXP Semi (NXPI, Financial), and Applied Materials (AMAT, Financial).