Buffett Brain · Research note
Score updated 26 Sept 2026 · analysis from 1 Jun 2026
LRCX· Technology
Lam Research
Lam Research is a superb toll-taker on every chip made, earning a 42.8 percent return on capital that the market has priced at 59 times earnings.
Buffett fit
Strong fit
Owner
92
Durability
80
Management
90
Price
0
Score updated 26 Sept 2026 · analysis from 1 Jun 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Technology stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If I owned all of Lam, I would be delighted with the operations and unhappy with the entry price.
The full reasoning comes with a free account.
Once a fab qualifies Lam's etch and deposition tools into a process node, ripping them out means requalifying an entire production line, so the customer tends to stay for the life of the node and the one after it.
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Management here behaves the way I like. They have shrunk the share count by 2.7 percent a year, carry only modest debt at 0.35 times equity, and sit in a net cash position of negative 0.13 times EBITDA, with interest covered 44 times over.
The full reasoning comes with a free account.
There is no at this price, and that is the whole problem.
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- The full reasoning behind all four pillars
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
6- 1 of 42.8 percent, the signature of a business that needs little to grow
- 2 of 49.98 percent and of 34.26 percent show genuine
- 3 at 1.01 times net income, so reported profit is real cash, not an accounting story
- 4Share count shrinking 2.7 percent a year, lifting per-share earnings by 11.3 percent on only 6 percent revenue growth
Concerns
6- 1The price is the dealbreaker: 59 times earnings and a 1.36 percent owner-earnings yield leave no room for error
- 2EV to of 67 means the whole enterprise is valued at sixty-seven years of operating profit
- 3Deeply cyclical demand tied to chip capital spending, with earnings already down as much as 12.6 percent in a weak year
- 4Revenue growth of only 6 percent a year does not justify a growth-stock multiple
Price history
$263+373.2%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Lam sells the etch and deposition machines that carve and layer the circuitry inside every advanced semiconductor, then collects a long tail of high-margin service, spares, and upgrades on the installed base. That razor-and-blade arrangement throws off a 49.98 percent and a 34.26 percent , with running at 1.01 times net income. Revenue has compounded only about 6 percent a year, but earnings per share grew 11.3 percent as shrank the share count.
How this analysis has moved
The call has held across 5 reviews.
Sep 27, 2026 → Oct 21, 2026
What other investors would say
The same company, judged by three other documented playbooks.
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