DCF Studio

    LRCX · NMS · Technology

    Lam Research Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 132.84

    Market price

    USD 227.56

    Implied upside

    -41.6%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2026-06-30

    AdjustedCapital expenditure runs at 3.5% of revenue against depreciation of 2.1%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Current EV/EBITDA of 32.7x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 132.84-41.6%
    Exit multiple
    USD 229.85+1.0%
    Market price
    USD 227.56

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn11bn23bnFY27FY28FY29FY30FY31FY32FY33FY34FY35FY36
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31FY32FY33FY34FY35FY36CAGR
    RevenueUSD 34.8bnUSD 41.9bnUSD 49.5bnUSD 57.4bnUSD 65.3bnUSD 72.7bnUSD 79.4bnUSD 84.9bnUSD 89.0bnUSD 91.2bn+11.3%
    EBITUSD 11.0bnUSD 13.2bnUSD 15.6bnUSD 18.1bnUSD 20.6bnUSD 22.9bnUSD 25.0bnUSD 26.7bnUSD 28.0bnUSD 28.7bn+11.3%
    NOPATUSD 9.7bnUSD 11.6bnUSD 13.7bnUSD 15.9bnUSD 18.1bnUSD 20.2bnUSD 22.0bnUSD 23.6bnUSD 24.7bnUSD 25.3bn+11.3%
    Add depreciation & amortisationUSD 729.5mUSD 878.1mUSD 1.0bnUSD 1.2bnUSD 1.4bnUSD 1.5bnUSD 1.7bnUSD 1.8bnUSD 1.9bnUSD 1.9bn+11.3%
    Less capital expenditureUSD -1.2bnUSD -1.5bnUSD -1.8bnUSD -2.1bnUSD -2.4bnUSD -2.7bnUSD -3.1bnUSD -3.3bnUSD -3.5bnUSD -3.7bn+13.2%
    Capex, % of revenue3.5%3.5%3.6%3.7%3.7%3.8%3.8%3.9%4.0%4.0%-
    Less increase in working capitalUSD -4.5bnUSD -2.8bnUSD -3.0bnUSD -3.1bnUSD -3.1bnUSD -2.9bnUSD -2.6bnUSD -2.2bnUSD -1.6bnUSD -868.9m-16.8%
    Free cashflow to firmUSD 4.7bnUSD 8.3bnUSD 10.0bnUSD 12.0bnUSD 14.0bnUSD 16.0bnUSD 18.0bnUSD 19.9bnUSD 21.4bnUSD 22.7bn+19.2%
    Discount factor0.94540.84490.75510.67490.60310.53900.48170.43050.38480.3439-
    Present valueUSD 4.4bnUSD 7.0bnUSD 7.6bnUSD 8.1bnUSD 8.4bnUSD 8.6bnUSD 8.7bnUSD 8.6bnUSD 8.2bnUSD 7.8bn-
    Present Value Of The ForecastUSD 77.4bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta1.677Reported 2.010, pulled toward 1.0 (Blume)
    Cost of equity11.99%Risk-free + beta x equity risk premium
    Cost of debt5.29%Risk-free + 40bp, the spread for a AAA rating at 52.3x interest cover. Book interest / average debt was lower, at 3.8%.
    Market capitalisationUSD 284.8bn98.7% of capital
    Total debtUSD 3.7bn1.3% of capital, book value as a proxy
    Tax rate11.9%Effective, capped at statutory
    WACC11.89%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 132.84

    53% of EV

    Forecast FCFF, final year
    USD 22.7bn
    Capex at depreciation, working capital in reinvestment
    USD 25.3bn
    Less reinvestment at g/ROIC (7.0% of NOPAT)
    USD -1.8bn
    Capitalised
    USD 23.5bn
    ROIC (reported)
    35.6%
    Terminal value, undiscounted
    USD 256.7bn
    Terminal value, discounted
    USD 88.3bn
    Enterprise value
    USD 165.7bn
    Less net debt
    USD -1.8bn
    Equity value
    USD 167.5bn

    Exit at 20.0x EBITDA

    Value per shareUSD 229.85

    73% of EV

    Terminal value, undiscounted
    USD 612.5bn
    Terminal value, discounted
    USD 210.6bn
    Enterprise value
    USD 288.0bn
    Less net debt
    USD -1.8bn
    Equity value
    USD 289.9bn

    Spread between methods: 53%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    9.89%165.20169.59174.65180.51187.37
    10.89%144.81147.78151.17155.05159.52
    11.89%128.50130.54132.84135.46138.45
    12.89%115.18116.59118.17119.95121.97
    13.89%104.14105.10106.18107.40108.77

    Outlined: this model. Green text: above today's price of 227.56. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year10.1%14.7%22.3%
    EBIT margin35.3%31.5%51.8%
    Discount rate-11.9%8.3%
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    Yahoo Finance and RBA data. General information, not advice. Methodology.