Chip firm Lam Research Corporation (NASDAQ:LRCX) experienced a 2.63% dip in pre-market trading on Thursday, despite posting strong earnings in the quarter ending in June 2024 and projections for the next quarter.
What Happened: On Wednesday, the California-based firm, which counts Intel, Micron Technology, and TSMC among its customers, reported revenue of $3.87 million, with a U.S. GAAP gross margin of $1.84 million or 47.5% of revenue. On a non-GAAP basis, the gross margin for the June 2024 quarter was $1.87 million, or 48.5% of revenue.
The company also anticipates its revenue for the quarter ending Sep. 29 to be in the range of $4.05 billion, plus or minus $300 million. Reuters reported that his estimate surpasses the average analyst prediction of $4.02 billion, based on LSEG data.
Despite these strong results and projections, the stock experienced a dip in pre-market. At the time of writing, the stock was trading at $897.00 after closing at $921.24 on Wednesday, according to Benzinga Pro.
The dip indicates that while the company's financial performance was robust, it may have been eclipsed by already lofty investor expectations.
Increased demand for AI-powered chips has heightened the need for wafer fabrication equipment, benefiting companies such as Lam Research. The firm's main competitors include Applied Materials (NASDAQ:AMAT), Dutch company ASML (NASDAQ:ASML), and KLA Corp (NASDAQ:KLAC).
Tim Archer, the company's CEO, emphasized the firm's strategic investments in R&D and operations, predicting a prolonged period of robust wafer fab equipment spending.
Why It Matters: Lam Research's shares had previously risen by 6.35% to $909.14 in response to strong second-quarter earnings from Advanced Micro Devices, Inc. (NASDAQ:AMD). The positive performance of a major player like AMD often boosts sentiment across the entire semiconductor and chip-related sector, leading investors to anticipate that other companies in the sector, such as Lam Research, will also benefit from favorable market conditions, technological advancements, or increased demand for semiconductor products.
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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari