LRCX · investment memo
Own FY2022-FY2026 median operating margin, one complete WFE cycle, dated. Opex bridge 47.3% gross - 11.4% R&D - 5.3% SG&A + 0.6% other = 31.2%. Constraint m_EBIT,T 31.2 <= m_gross,T 47.3 SATISFIED (tested on the 5-year median gross margin, not the higher 50.5% trailing). 4.1pp BELOW the FY2026 trailing actual of 35.3%, justified by a named cause (State-B business observed at a dated cycle peak; terminal year is mid-cycle by construction), and ABOVE the 10-year median of 29.4%. Added as a percent because the pre-existing `terminal_margin` is the fraction 0.312 and only analysis_schema.normalize() rescales it.
Four distinct questions, one field each. A price is not a thesis: the trigger below forces a re-underwrite and freezes further purchases — it is never an automatic sell.
A daily close below $202.13 triggers a mandatory re-underwrite and freezes further purchases. It is not an automatic sell unless a separate fundamental invalidation condition has been breached.
Not stated. This name has no falsifiable invalidation conditions on file, so it cannot be risk-monitored. That is a gap in the research, not a clean bill of health — recorded rather than hidden.
Named cause: the receivables build proving to be pulled-forward revenue. DSO rose 12.9 days as receivables grew 58.1% against revenue of 30.0%. If that reverses — i.e. if Q4 FY2026's 15.1% sequential revenue jump was shipment timing rather than demand — the September-2026 and December-2026 quarters absorb the payback, and Lam re-rates on decelerating revenue while the memory narrative is still priced in. Combine the FY2024 trough operating margin (28.6%) with a 25% revenue decline to $17.4bn — both printed inside the last three years — and EBIT is ~$5.0bn, net income ~$4.2bn, EPS ~$3.38. At th