Lam Research beat estimates and still fell 11.76%; KLA's October 28 print settles it
Equipment makers were marked down on October 22 for a supply warning from a company that beat consensus. KLA, which disclosed the same shortages in July, reports on October 28 without having said a word since.
Richard Tang · 2 min read
Lam Research+0.47% — Lam Research, up 0.47 percent today beat Wall Street on both lines last quarter, guided December higher than consensus on both lines, and still lost 11.76% on October 22. That combination has a name: investors repricing timing, not demand. KLA−0.35% — KLA, down 0.35 percent today, which disclosed the same shortages months earlier and has said nothing since, reports on October 28, and its gross margin will tell us which story the market should have been selling.
Lam's numbers say the build-out is supply-limited
Lam's September quarter brought record revenue of $8.22 billion and its first operating margin above 40% 12. For December it guided to $8.60 billion of revenue and $2.33 of earnings per share, above the $8.53 billion and $2.31 analysts expected 12.
The shortfall against what Lam could have shipped is real: CFO Doug Bettinger said near-term supply constraints could push some December shipments into March, and CEO Tim Archer expects shortages to limit chip and equipment makers into 2027 23. A company guiding above consensus while describing delayed shipments is not describing shrinking demand. It is describing orders it cannot fill fast enough.
Lam's revenue hit a record in September and its December guide points higher still
- Revenue
- Estimate
Data
| Revenue | |
|---|---|
| Jun '25 | 5.17B |
| Sep '25 | 5.32B |
| Dec '25 | 5.35B |
| Mar '26 | 5.84B |
| Jun '26 | 6.72B |
| Sep '26 | 8.22B |
| Dec '26 guide (estimate) | 8.6B |
KLA told this story first, and has been marked down twice for it
KLA said on its July 28 call that shortages of long-lead materials were stretching its lead times to 18 to 24 months on some products, alongside a memory-pricing headwind, with memory around 27% of September-quarter process control systems revenue 4. The stock fell 18% after that print 56. Then a peer used the same words and KLA fell another 9.6% on October 22, to $147.83, where it trades at 26.8 times forward earnings 56. Two markdowns, one constraint, and silence from the company until October 28 56.
What the bears are really betting, and what settles it
Selling KLA is a bet that its memory customers are about to slow, not that shipments slip. The bear case gained material this week: SK hynix+4.19% — SK hynix, up 4.19 percent today halted the Solidigm IPO review citing capital market conditions 78, and Nvidia's−0.19% — Nvidia, down 0.19 percent today chief executive said capital for the build-out is scarce 7.
But capital-market jitters sit upstream of Lam guiding to record revenue. Watch KLA's September gross margin against the 62.5% it guided, plus or minus a point 4. If it holds, the constraint is timing and KLA has been sold twice for one delay. If it breaks, memory capex is the problem and the sellers were early rather than wrong. Insider selling of $112.3 million over the past year, with no buying, adds caution but says nothing about demand 6. Timing, not appetite, is the constraint in this build-out, and the shortage itself is evidence the shopping list still outruns the supply chain.
What happens next
KLACDoes KLA's gross margin hold the 62.5% guide, plus or minus a point?
The case for
Lam beat consensus and guided December revenue and EPS above it despite the supply warning
The case against
Memory is around 27% of KLA's September-quarter process control revenue, and memory pricing is a stated headwind
- October 28KLA reports September-quarter results.
Get our follow-up when these land
Free. We'll email you when we publish on KLA, and send our free weekday newsletter. Unfollow in one click.
