Lam Research Corp. (NASDAQ:LRCX)

The valuation ratios exhibit a synchronized cyclical pattern characterized by an initial contraction, a period of recovery, and a subsequent aggressive expansion before a final correction. Across all metrics, a significant trough occurred in September 2022, followed by a sustained upward trajectory in valuation multiples that peaked in mid-2026.

Earnings and Operating Profit Multiples

The Price to Earnings (P/E) and Price to Operating Profit (P/OP) ratios tracked closely, both reaching their lowest points in September 2022 at 10.51 and 8.94, respectively. A substantial valuation expansion is observed starting in late 2023, with the P/E ratio climbing from 19.89 in September 2023 to a peak of 53.62 in June 2026. This indicates a period of significant market optimism or a sharp decline in relative earnings growth during the peak. A sharp correction followed, with the P/E ratio retreating to 34.02 by September 2026.

Revenue Valuation

The Price to Sales (P/S) ratio followed a similar trend, declining from 4.91 in September 2021 to a minimum of 2.83 in September 2022. A notable acceleration in the P/S ratio is observed between December 2024 and June 2026, where the ratio surged from 6.42 to 16.77. This suggests that the market began pricing the company at a significantly higher premium relative to its top-line revenue during this window, before moderating to 11.00 in the final quarter.

Asset-Based Valuation

The Price to Book Value (P/BV) ratio experienced the most dramatic proportional increase. After hitting a low of 6.88 in September 2022, the ratio ascended to 31.24 by June 2026. The rapid escalation in P/BV, particularly between September 2025 and December 2025—where the ratio jumped from 18.69 to 30.55—reflects a substantial increase in the market premium attributed to the company's assets or a shift toward an intangible-heavy valuation model. The ratio eventually corrected to 20.67 by September 2026.

The convergence of these trends suggests a period of extreme valuation volatility. The synchronized peaking of all four ratios in June 2026 indicates a valuation bubble or a period of peak growth expectations, while the subsequent decline across all metrics in September 2026 suggests a return toward more sustainable valuation levels.

The Price-to-Earnings (P/E) ratio exhibited significant volatility over the observed period, transitioning through phases of valuation contraction, aggressive expansion, and eventual correction.

Valuation Compression (September 2021 – September 2022)

A clear downward trend in the valuation multiple is observed during this period. The P/E ratio declined from 18.12 to a low of 10.51. This contraction was driven primarily by a decrease in share price, which fell from 54.89 to 37.40, while earnings per share (EPS) remained relatively stable and slightly increased from 3.03 to 3.56.

Multiple Expansion and Recovery (December 2022 – March 2024)

The P/E ratio entered a period of sharp ascent, rising from 12.60 to 33.64. This expansion was characterized by a strong recovery in share price, which reached 92.88 by March 2024. During this phase, the valuation grew despite fluctuations in EPS, which dipped to a low of 2.64 in December 2023, suggesting that market sentiment shifted toward higher growth expectations regardless of short-term earnings volatility.

Accelerated Growth and Peak Valuation (March 2025 – June 2026)

A period of extreme valuation surge occurred between March 2025 and June 2026. The share price escalated from 71.42 to 311.35, while EPS grew from 3.64 to 5.81. Because the share price appreciation significantly outpaced the growth in earnings, the P/E ratio reached its peak of 53.62 in June 2026, indicating a period of high market optimism.

Recent Valuation Correction (September 2026)

A substantial correction is evident in the final period. The P/E ratio dropped to 34.02 as the share price declined to 230.15. Notably, this contraction occurred despite EPS reaching its highest point in the series at 6.76, indicating that the valuation multiple normalized as the market adjusted the price relative to the improved earnings base.

The financial data reveals a period of significant volatility and substantial valuation expansion for the equity, characterized by a widening gap between market pricing and operational earnings before a late-term correction.

Share Price Trajectory

The share price exhibited three distinct phases. An initial period of decline and consolidation occurred between September 2021 and September 2022, with the price dropping from 54.89 to a low of 37.40. This was followed by a sustained bullish trend that accelerated sharply after December 2024, culminating in a peak of 311.35 in June 2026. The final quarter shows a significant correction, with the price retreating to 230.15 by September 2026.

Operating Profit per Share Performance

Operating profit per share demonstrated more stability than the share price, though it followed a cyclical pattern. After an initial climb to 4.48 in December 2022, profit levels dipped to a trough of 2.96 in December 2023. From January 2024 onward, a consistent upward trend is observed, with operating profit growing every consecutive quarter to reach a terminal high of 7.73 in September 2026.

Price to Operating Profit (P/OP) Analysis

The P/OP ratio reflects a dramatic shift in market valuation multiples. Between September 2021 and September 2022, the ratio compressed from 15.79 to 8.94, indicating a period of undervaluation or diminished market sentiment. A subsequent expansion phase began in late 2022, with the ratio climbing to 30.42 by March 2024, suggesting that share price growth significantly outpaced operational gains.

A period of volatility occurred between March 2024 and March 2025, where the ratio fluctuated before plunging to 17.28. However, the most aggressive valuation spike occurred between April 2025 and June 2026, where the P/OP ratio reached an apex of 47.51. This indicates a peak in speculative pricing or extremely high growth expectations. The period concludes with a sharp contraction to 29.78 in September 2026, driven by a decline in share price despite the continued increase in operating profit per share.

The price-to-sales (P/S) ratio exhibits a volatile trajectory characterized by an initial contraction, a mid-term recovery, a period of aggressive expansion, and a final correction. Over the observed period, the valuation multiple shifted from a baseline of approximately 4.91 to a peak of 16.77, before receding to 11.00.

Valuation Contraction and Bottoming (September 2021 – September 2022)

A downward trend in the P/S ratio is observed during the first year, falling from 4.91 to a period low of 2.83. This compression was driven primarily by a decline in share price, which dropped from 54.89 to 37.40, despite a simultaneous increase in sales per share from 11.19 to 13.20. This indicates that the valuation decline was a result of market sentiment or price correction rather than a deterioration in revenue performance.

Recovery and Multiple Expansion (December 2022 – March 2024)

The P/S ratio entered a recovery phase, climbing from 3.39 in December 2022 to a peak of 8.53 by March 2024. During this interval, the share price saw a significant increase, rising to 92.88. Notably, this expansion in the valuation multiple occurred while sales per share experienced a general decline, moving from 14.12 to 10.89, suggesting that the market began pricing in higher future growth expectations independently of current revenue levels.

Aggressive Valuation Surge (June 2024 – June 2026)

Following a brief stabilization, the P/S ratio underwent an aggressive ascent, reaching a maximum of 16.77 in June 2026. This surge was characterized by a rapid acceleration in share price, which climbed from 79.73 to 311.35. While sales per share also grew steadily from 11.48 to 18.57 during this period, the growth in share price significantly outpaced revenue growth, leading to a substantial expansion of the valuation multiple.

Final Correction (September 2026)

A sharp correction is observed in the final quarter, with the P/S ratio falling from 16.77 to 11.00. This decrease was driven by a reduction in share price to 230.15, occurring even as sales per share continued to rise to a period high of 20.92. This divergence suggests a market-driven correction of the valuation multiple despite continued fundamental growth in revenue.

The Price to Book Value (P/BV) ratio exhibits significant volatility over the analyzed period, characterized by an initial contraction, a period of stabilization, and a subsequent aggressive expansion followed by a correction.

Book Value per Share (BVPS) Progression

A consistent upward trajectory is observed in the BVPS, which increased from 4.13 US$ in September 2021 to 11.13 US$ by September 2026. This steady growth indicates a continuous accumulation of net assets over the period, providing a strengthening fundamental value base per share.

Share Price Dynamics

The share price demonstrates high volatility compared to the steady growth of the book value. After reaching a period low of 37.40 US$ in September 2022, the price underwent a recovery phase, followed by an exponential increase starting in June 2025 (102.00 US$) and peaking at 311.35 US$ in June 2026.

P/BV Ratio Phase Analysis

The valuation multiple transitioned through three distinct stages. An initial contraction phase occurred between September 2021 and September 2022, with the ratio falling from 13.28 to a low of 6.88. This was followed by a stabilization and moderate recovery phase from December 2022 through June 2025, where the ratio generally fluctuated between 7.78 and 15.14. A final rapid expansion phase occurred between September 2025 and June 2026, during which the P/BV ratio peaked at 31.24, suggesting a significant premium placed on the company's market value relative to its accounting value.

Terminal Valuation Correction

In the final quarter ending September 2026, the P/BV ratio declined to 20.67. This correction was driven by a reduction in the share price to 230.15 US$, occurring even as the BVPS continued to rise to 11.13 US$, indicating a reduction in the valuation multiple toward more historical norms.