Shares of semiconductor manufacturing services and equipment company Lam Research (LAM.US) and UPS (UPS.US), the largest U.S. logistics company, are gaining nearly 6% today before the U.S. market opens. In the former case, Lam shares are trying to break a fatal downward streak that has lasted since July, while in the latter they are 'saying goodbye' to multi-year lows and are likely to test the 200-session moving average today.

Lam Reserach (LAM.US)

  • Earnings per share were $0.86 vs. $0.81 forecast, revenue was $4.17 billion vs. $4.05 billion expected
  • Revenue rose 8% quarter-on-quarter and 20% YoY, and operating profit margin improved 1.2% to 30.3%. The company's cash position stands at $6.1 billion, compared to $5.9 billion in Q2
  • Company expects Q4 earnings per share in range of $0.77 to $0.97, expectations suggested $0.85; estimates Q4 revenue in range of $4 to $4.6 billion, Wall Street expected $4.22 billion
  • Lam expects its gross margin to decline from 48.2% now (47.9% a year earlier) to 46.9% in Q4; between Q2 and Q3, the company's gross margin fell 30 bps. China accounts for as much as 37% of revenue; Taiwan and South Korea account for 15 and 18%, respectively
  • Revenue in China declined, but company sees catalysts from advanced packaging and manufacturing markets; CAPEX came in at $110 million vs $77 million in Q3 2023

Despite the strength of the business, the large exposure to China has not served the company well in recent times. In addition, part of Lam's solutions are related to the non-artificial intelligence chip sector, where a slowdown is still evident. Nevertheless, the results turned out to be very solid, and the expected decline in gross margins did not spook investors.

United Parcel Service (UPS.US)

  • Earnings per share rose to $1.80 per share vs. $1.31 in Q3 2023 (net $1.54 billion vs. $1.13 billion); Wall Street expected $1.63 (12% y/y increase)

  • Revenue exceeded expectations for the first time in 2 years, domestic US business performed strongly. Sales rose 5.6% year over year to $22.25 billion, vs. consensus of $22.1 billion 

  • Margins in the U.S. domestic market sector fell slightly to 6.2% but operating profit rose 47.8% year-on-year
  • U.S. shipment volumes rose 6.5% year-on-year, in the international sector revenue per shipment increased 2.5% year-on-year 
  • Revenues from the company's largest segment, the shipping and logistics sector operating in the US, rose 5.8% y/y to $14.45 billion vs. $14.27 billion forecasts
  • The company lowered annual revenue expectations to $91.1 billion from $93 billion previously, but investors liked the improved profitability; the change was prompted by the sale of Coyote Logistics

UPS's strong performance is 'further evidence' of the continued strength of the overall U.S. economy and the average consumer. Significant aspects are the increase in shipment volumes in Q3 and the sizable increase in profit. 

Lam Reserach and UPS charts (D1)

Source: xStation5Source: xStation5