Lam Research Slumps as Semiconductor Sector Headwinds Resurface

• Lam Research (LRCX) shares fell 2.38% to $98.66, trading between $96.19 and $98.67 intraday.
• The decline followed ASML’s warning on 2026 growth amid geopolitical tensions and potential U.S. tariffs.
• The stock has endured 27 volatility spikes exceeding 5% in the past year, with today’s move marking another sector-driven reaction.
• Sector peers like Applied Materials (AMAT) and KLA Corp. mirrored the downturn, reflecting broader industry concerns.

LRCX’s slide underscores growing investor anxiety over semiconductor equipment demand as macroeconomic and trade risks escalate. The stock’s 34.3% YTD gain faces pressure as ASML’s caution signals a potential slowdown in AI-driven chip investments.

ASML’s 2026 Outlook Sparks Sectorwide Sell-Off
Lam Research’s decline stems directly from ASML’s warning that it can no longer confirm growth in 2026 due to macroeconomic and geopolitical headwinds, including potential U.S. tariffs. ASML’s Q2 earnings beat was overshadowed by a weak 2026 outlook and below-forecast third-quarter guidance, triggering a 10% drop in its shares. The ripple effect hit Lam Research and other semiconductor equipment peers, as investors reassessed the sector’s reliance on AI-driven chip demand. Notably, ASML’s reduced China revenue forecast—from 49% to 20%—heightened concerns over supply chain fragmentation and demand volatility.

Semiconductor Equipment Sector Slumps in Sync
Lam Research’s 2.38% decline mirrors the broader semiconductor equipment sector’s weakness, with sector leader Applied Materials (AMAT) falling 2.97%. The correlated moves reflect shared exposure to global trade tensions and AI chip investment cycles. While Lam Research outperformed AMAT’s price drop, both stocks face headwinds from ASML’s caution, illustrating the sector’s interconnected risks. The NASDAQ Semi index’s 2.1% dip further underscores the industry’s vulnerability to macroeconomic and geopolitical shocks.

Bearish Options Highlight Near-Term Volatility
• Technical Indicators:
• 200-day MA: $101.19 (above current price)
• RSI: 72.41 (overbought)
• Bollinger Bands: Current price hovers near the middle band ($96.96)
• MACD: Negative divergence (-0.15 histogram) suggests downward momentum.

LRCX’s near-term resistance rests at the 200-day MA ($101.19), while support lies at the 30-day low ($91.34). Aggressive traders might consider short positions into resistance, while cautious investors await a breakout from the $96–$98 range.

Top Option Picks:
1. LRCX20250725P93 (Put Option)
- Strike: $93 | Expiry: July 25
- IV: 37.5% | Delta: -14.7% | Theta: -0.016 | Gamma: 3.75%
- Turnover: 8,145 contracts (high liquidity)
- Why: A 5% downside to $93.73 would maximize this put’s payoff ($93 - $93.73 = max $0.73 profit). Its high gamma and moderate delta offer sensitivity to volatility spikes.

2. LRCX20250725C93 (Call Option)
- Strike: $93 | Expiry: July 25
- IV: 33.9% | Delta: 87.6% | Theta: -0.339 | Gamma: 3.70%
- Turnover: 82,208 contracts (sector-leading liquidity)
- Why: This at-the-money call offers 206% leverage with a 71.4% price gain. A rebound above $96 would trigger rapid value appreciation, though its high theta demands timing discipline.

Action Alert: For short-term traders, LRCX20250725P93 offers protection against further declines, while bulls should wait for a close above $101 before engaging calls.

Backtest Lam Research Stock Performance
The backtest of LRCX's performance after an intraday plunge of -2% shows favorable short-to-medium-term gains. The 3-Day win rate is 53.19%, the 10-Day win rate is 50.90%, and the 30-Day win rate is 54.17%. Although the maximum return during the backtest period is only 0.34% at day 59, the overall trend suggests that LRCX tends to recover modestly following a significant intraday decline.

Buckle Up for Semiconductor Volatility: LRCX Faces Crossroads
Lam Research’s slide reflects sectorwide concerns over geopolitical risks and demand volatility, but its 34% YTD gain suggests underlying strength remains. Investors must monitor ASML’s 2026 outlook updates and U.S.-China trade developments. Technical resistance at $101.19 and support at $91.34 define the near-term battleground. With Applied Materials (AMAT) down 2.97%, sector leadership hinges on navigating macro headwinds. For now, traders should treat dips below $95 as buying opportunities in the long-term AI narrative—provided geopolitical risks don’t derail chip investments entirely.