Lam is executing, but $329 needs 37 times the $8.90 of earnings I see in a year. A 30 times multiple on that print is $267. The market is too optimistic.
Key points
- $8.1 billion September-quarter revenue guide, up more than 20% from June's $6.72 billion GAAP.
- 37 times is what $329.36 requires on my $8.90 next-twelve-month earnings.
- Mid-teens tax rate from this fiscal year, versus 11% in the June quarter.
The call
The price requires roughly $32 billion of next-twelve-month sales at 40% operating margin and a 37 times earnings multiple. That is a mid-cycle multiple stretched onto peak-cycle growth after a 135% twelve-month run.
I expect about $30 billion of fiscal-2027 sales, 40% operating margin, and $8.26 of fiscal-2027 earnings, rising to $8.90 on a next-twelve-month basis by October 2027. A 30 times multiple, closer to equipment-cycle history, produces $267. The market is too optimistic.
Revenue ($ billions) and operating margin- Revenue
- Operating margin %
GAAP through June 2026; E is this desk. Source: SEC company facts, Oct 8 2026.
Valuation
| Item | Figure |
|---|
| Fiscal 2027 revenue (this desk) | $30.0 billion |
| Operating margin | 40% |
| Fiscal 2027 EPS (1.24 billion shares, 16% tax) | $8.26 |
| Next-twelve-month EPS, Oct 2027 | $8.90 |
| Multiple | 30 times |
| 12-month target | $267 |
Thirty times is still rich versus Lam's own history outside AI booms, but it credits etch intensity and support mix. Asymmetry is poor: a 20% miss on earnings or a 5-turn multiple compression both take the stock well below $220, while a blowout only justifies today's price if the multiple holds.
Trailing four-quarter GAAP EPS- Reported TTM EPS
- This desk TTM EPS
GAAP as reported; E is this desk. SEC facts through June 2026.
Risks
- NAND conversions stall if enterprise SSD demand or layer-count upgrades slow; watch sequential NAND systems dollars on the October 21 call.
- China export rules or mix shift cut revenue faster than foundry/logic offsets; watch China share of total sales versus June's 26%.
- Gross margin fails to hold 52% as mix or pricing fades; watch the September print versus 52% plus or minus 1 point.
What would change my mind
A clean beat-and-raise on October 21 that includes a numerical 2027 WFE number above $160 billion with margin still expanding.