Why Is Lam Research (LRCX) Down 5.4% Since Last Earnings Report?

Core Viewpoint - Lam Research reported strong Q1 fiscal 2026 earnings, surpassing expectations, with significant year-over-year growth in both revenue and earnings per share, despite a recent decline in share price [2][3][12] Financial Performance - Non-GAAP earnings per share for Q1 fiscal 2026 were $1.26, exceeding the Zacks Consensus Estimate by 4.1% and reflecting a 46.5% increase year-over-year [2] - Revenues for the first quarter reached $5.32 billion, surpassing the consensus estimate by 2% and increasing 28% from $4.17 billion in the same quarter last year [3] Revenue Breakdown - Systems revenues accounted for $3.55 billion, representing 66.6% of total revenues, up 3% from the previous quarter and 48% year-over-year [4] - Customer Support Business Group revenues were $1.77 billion, making up 33.4% of total revenues, with a 2.5% rise from the previous quarter and a slight 0.1% increase year-over-year [5] Operating Metrics - Non-GAAP gross margin improved to 50.6%, up 30 basis points from the previous quarter, while non-GAAP operating expenses rose to $831.92 million, a 1.2% increase [6] - The non-GAAP operating margin improved to 35%, reflecting a 60 basis points sequential increase [6] Balance Sheet and Cash Flow - As of September 28, 2025, Lam Research held $6.69 billion in cash and cash equivalents, an increase from $6.39 billion in the prior quarter [7] - Cash flow from operating activities decreased to $1.78 billion, down from $2.55 billion in the previous quarter, with dividends paid totaling $291.9 million and share repurchases amounting to $975.8 million [7] Guidance and Outlook - For Q2 fiscal 2026, Lam Research projects revenues of $5.2 billion (+/- $300 million), with a non-GAAP gross margin of 48.5% (+/-1%) and non-GAAP earnings per share of $1.15 (+/- $0.10) [8] - Recent estimate revisions have shown a 10.53% upward trend, indicating positive sentiment among analysts [10] - Lam Research holds a Zacks Rank 2 (Buy), suggesting expectations for above-average returns in the coming months [12]