Shares of Lam Research (LRCX) closed marginally lower on Thursday, retreating 0.2% to $234.76 after a session marked by significant price swings between $229.73 and $240.25. The movement reflected broader caution in the semiconductor equipment sector ahead of pivotal market catalysts.
Sector Faces Dual Headwinds
Chip-tool stocks remained in focus following news that the U.S. Commerce Department reached a $252 million settlement with rival Applied Materials (AMAT) over illegal exports of equipment to China's SMIC. The resolution, which also saw related Justice Department and SEC probes closed, highlighted persistent regulatory risks for companies with significant China exposure.
Investors exhibited limited appetite for aggressive positioning as they awaited two critical events: the consumer price index (CPI) report due Friday and Applied Materials' fiscal first-quarter results scheduled for release after Thursday's market close. The sector is particularly sensitive to shifts in interest rate expectations and U.S.-China trade policy.
Broader Market Context
Technology shares broadly weakened as traders positioned for inflation data that could influence Federal Reserve policy. "The bull case on the Fed cutting was pretty much centered around the weak employment picture, so that case was challenged," noted Jay Hatfield of Infrastructure Capital Advisors. The muted activity followed a strong Wednesday session where Lam's stock had gained 3.76%.
In related developments, SMIC warned of margin pressures from heavy capital spending on equipment, stating that rapid revenue growth came with "considerable depreciation pressure on gross profit margins," according to co-CEO Zhao Haijun.
Company Outlook and Near-Term Catalysts
Lam Research last provided guidance on January 28, forecasting third-quarter revenue of approximately $5.7 billion, plus or minus $300 million, and adjusted earnings of about $1.35 per share, plus or minus 10 cents. CEO Tim Archer highlighted the company's role in enabling "the market's transition to smaller, more complex three-dimensional devices and packages."
Immediate attention turns to Applied Materials' earnings after Thursday's close and Friday's CPI report. A hotter-than-expected inflation print could pressure high-multiple tech stocks, while any indication of stricter export enforcement could dampen demand linked to China. The sector's AI-driven demand narrative faces a test under potential higher rates and increased regulatory scrutiny.
