Lam Research Sinks 16%, Applied Materials 15% in a Week. Lam Responds With $25 Billion Buyback
Yahoo! Finance ·
Key points
- Lam Research fell roughly 16% over the week to close at $200.44, with the 16% single-session drop occurring on November 5 amid broader worries about AI infrastructure spending and semiconductor equipment demand.
- Applied Materials declined about 15% in the same period, reflecting general uncertainty about chipmakers’ capital spending and future growth prospects.
- Lam announced a $25 billion share repurchase authorization, representing about 10% of its market capitalization at the time, and a quarterly dividend of $0.33 per share to bolster capital returns.
- Executive vice president and CFO Doug Bettinger emphasized Lam’s strong technology position and cash generation, noting the plan’s flexibility to repurchase shares when valuations seem attractive.
- CEO Tim Archer reaffirmed that industrywide wafer-fab equipment spending could exceed $200 billion in 2027, roughly 30% above expected 2026 levels, signaling a favorable long-term growth trajectory.
- Analyst consensus prior to the volatility showed Lam’s normalized earnings per share rising from $5.82 in 2026 to $9.65 in 2027, indicating expectations for stronger equipment demand.
- Lam’s valuation fell below its five-year average during the pullback, suggesting potential upside if demand strengthens, though the rebound has narrowed the discount and forward targets.
Summary
Over a volatile week, Lam Research and Applied Materials saw sharp declines on concerns over AI-driven semiconductor spending, with Lam dropping around 16% and AMAT about 15%. In response, Lam unveiled a $25 billion share repurchase plan and a quarterly dividend as management signaled capital-return flexibility amid uncertain demand. The company pressed the case for a long-run industry outlook, projecting wafer-fab equipment spending above $200 billion in 2027, while analysts anticipated improving earnings as demand strengthens. Valuation gaps suggested potential upside if spending recovers, though the path depended on sustained AI infrastructure investments and consensus earnings revisions. Looking ahead, near-term catalysts include updates on demand, memory trends, and the pace of capital expenditure through next year.
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