- Lam Research stock crashed by over 7% in the extended hours, reaching its lowest level since April, even after the company published strong financial results.
Lam Research stock crashed by over 7% in the extended hours, reaching its lowest level since April, even after the company published strong financial results. It tumbled to $240, continuing a sell-off that started in June when it peaked at $437.96.
Lam Research Stock Drops Despite Strong Earnings
Lam Research is a top company that manufactures products that are used in the semiconductor manufacturing industry. Its products are in the wafer fabrication industry, which include deposition, etch, clean and surface preparation, and patterning.
The company is benefiting from the ongoing demand for semiconductor and memory products amid the artificial intelligence boom. Its results released on Wednesday showed that its growth gained momentum in the September quarter, with its revenue rising to $8.2 billion, up by 22% from the June quarter.
The company has benefited from the higher prices, with the gross and operating margin rising to 52.3% and 40%, respectively. As a result, its earnings-per-share jumped by 21% on a quarter-on-quarter basis.
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These numbers were fairly easy to predict since the company’s top clients have announced strong metrics of late. This includes top companies like Micron, Samsung Electronics, SK Hynix, and SanDisk.
The company expects that its revenue growth will accelerate in the coming quarters. Its guidance is that the fourth-quarter revenue will jump to $8.6 billion, higher than what analysts were expecting. The gross and operating margins will then move higher to 52.5% and 40.5%, respectively.
Lam Research stock, therefore, dropped because of the high bar that investors had set ahead of its earnings report. We have seen the same situation happen among other top companies in the industry like Micron, Samsung, and SanDisk.
Also, the decline is because investors are still concerned about the artificial intelligence sector, with some analysts warning that the bubble may burst soon.
Lam Research Share Price Technical Analysis
Lam Research stock chart | Source: TradingView
The daily chart shows that the Lam Research stock has tumbled in the past few months. It initially dropped to $251 in July and then bounced back to $351 this month. Now, it has resumed the downward trend and fallen below the important support level of $251.
The stock has moved below all moving averages, a sign that bears have prevailed. Therefore, the stock will likely continue falling in the near term now that it has moved to the markdown phase of the Wyckoff Theory. If this happens, it may drop to $200 and below.
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