What Happened:
Shares of semiconductor equipment maker Lam Research (NASDAQ:LCRX) jumped 9.41% in the morning session after the company reported fourth quarter results that exceeded analysts' revenue, operating profits, and earnings per share (EPS) expectations. Notably, EPS beat by an impressive 16%. Looking ahead, revenue and EPS guidance for the next quarter exceeded Consensus estimates, which was another major positive. Longer term, management also added that while generative AI is still in its early stages, it is an emerging growth driver for the company. It is estimated that every 1% penetration of AI in datacenters will result in an incremental $1.0 to $1.5 billion of wafer fabrication equipment spend, which benefits Lam Research.
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What is the market telling us:
Lam Research's shares are very volatile and over the last year have had 23 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. The previous big move was three months ago, when the stock gained 7.61% on the news that the company reported earnings results for the last quarter that surpassed expectations for revenue and operating profits. However, sales guidance for the next quarter came in below Consensus.
Lam Research is up 71.9% since the beginning of the year. Investors who bought $1,000 worth of Lam Research's shares 5 years ago would now be looking at an investment worth $3,750.
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