Lam Research Stock Tumbles on Rival’s Weak Outlook

Lam Research (LRCX) shares dropped nearly 7% after semiconductor equipment rival Applied Materials (AMAT) issued a concerning Q4 forecast. Despite beating Q3 estimates with $2.48 EPS and $7.3B revenue, AMAT warned of sequential profit decline to $2.11/share next quarter—well below analyst expectations.

The guidance reflects softening demand in China, where semiconductor manufacturers have largely completed capacity expansions. AMAT also cited unpredictable ordering patterns from cutting-edge chipmakers, suggesting broader industry headwinds beyond just China's digestion cycle.

This domino effect highlights the fragile sentiment in semiconductor capital equipment stocks. When one major player stumbles, the market punishes the entire sector—demonstrated by Lam's disproportionate reaction to a competitor's warning.