Lam Research fell 11.76% after saying it could not get enough parts, and chip stocks followed

Lam Research makes the machines chipmakers use to etch and coat silicon wafers. It closed Thursday at US$230.15, down 11.76%, the steepest fall among the chip stocks in the Nasdaq-100.

Lam says it could have sold more. Revenue in the September quarter was a record US$8.22 billion. Lam expects about US$8.6 billion in the December quarter, and chief financial officer Doug Bettinger said that forecast would have been a bit higher without some short-term supply problems.

That was enough to sink the sector. All 22 chip and data storage makers in the Nasdaq-100 closed lower. Nvidia fell 4.40% to US$212.21, and a widely followed index of chip stocks dropped more than 6%.

Meta added to the gloom. Its shares rose more than 3% after hours on Wednesday, then fell 6.98% on Thursday to US$648.85.

Its quarterly filing showed US$825 billion of future leases and contracts, mostly for data centres and cloud deals. In July the figure was nearly US$700 billion.

Final take

Lam's customers still want its machines, and Bettinger expects supply to stay tight into 2027. Our read is that the bigger question for chip stocks sits with the buyers. Meta's free cash flow was negative last quarter, and its commitments grew by about US$125 billion in three months.

This story ran in Chips Down, Soap Up Friday 23 October’s edition, with the market snapshot, the other two stories, the numbers and the week ahead. Read the whole edition →

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