Lam Research Corp (NASDAQ:LRCX) reported better-than-expected first quarter earnings and revenue, sending shares up over 6.5% as the semiconductor equipment maker provided an optimistic outlook for the coming quarter.

The company posted adjusted earnings per share of $0.86 for the quarter ended September 29, 2024, surpassing analyst estimates of $0.81. Revenue came in at $4.17 billion, exceeding the consensus forecast of $4.05 billion and representing a 7.6% increase YoY.

Lam Research's guidance for the second quarter also topped expectations. The company projects revenue between $4 billion and $4.6 billion, with the midpoint of $4.3 billion above the $4.22 billion analyst consensus. Adjusted EPS is expected to range from $0.77 to $0.97, compared to the $0.85 consensus estimate.

"With continued strong execution, Lam delivered financial performance ahead of expectations," said Tim Archer, Lam Research's President and CEO. "Looking forward, etch and deposition are fundamental to enabling the next generation of semiconductors."

The company's gross margin improved to 48.0% from 47.5% in the previous quarter. Operating income as a percentage of revenue increased to 30.3% from 29.1% sequentially.

Commenting on the report, Bernstein analysts said Lam's results "were likely taken decently well, especially given the fear following ASML’s results last week."

They said the company's commentary into 2025 "appears supportive and suggestive that some of their peer’s issues are more idiosyncratic vs structural." Moreover, general tailwinds for the stock -- leading-edge foundry gains, HBM, and a rebound in NAND -- are seen as reasonable, with the company expecting growth even as China normalizes.

However, analysts note that achieving this growth may require significant contributions from outside China (around 30%), and questions remain about the trajectory of gross margins "as China business rolls off remains a bit of an outstanding question, and the export control overhang remains on the overall space for now."

Separately, Jefferies analysts said they "have a hard time seeing the overall semi cap group working, given this backdrop," especially in China. Still, the firm believes "there
is likely some reversion to the mean for LRCX, especially if NAND can grow next year."

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