New York, February 4, 2026, 18:04 EST — After-hours
Lam Research (LRCX.O) shares dropped almost 9% in late trading Wednesday, deepening the selloff in chip stocks. The stock slipped 8.8% to $209.78, hitting a low of $205.14 earlier in the session.
This matters because Lam plays a central role in the chip spending cycle: when investors pull back on AI-related bets, suppliers to chipmakers feel the impact fast. Selling has begun to spread, too, dragging down equipment makers along with chip designers.
U.S. stocks closed lower, with the Nasdaq dropping 1.5% and the PHLX semiconductor index tumbling 4.4%. Investors are growing wary of high valuations and the sustainability of the AI rally. “The market is suddenly skeptical and concerned about it,” noted Jed Ellerbroek, portfolio manager at Argent Capital in St. Louis. 1
Lam shook up its leadership late Tuesday. COO Pat Lord is set to retire, with Sesha Varadarajan stepping into the role on March 6, the company confirmed. Meanwhile, Karthik Rammohan will take on broader operational responsibilities. CEO Tim Archer praised Lord’s impact, saying, “Pat’s leadership has helped build the Lam we know today.” 2
A filing on Wednesday revealed that Lam added Cadence Design Systems CEO Anirudh Devgan to its board and innovation and technology committee, increasing the board’s size by one seat. The document also noted that Lord informed the company on Jan. 30 of his retirement decision. 3
Tensions between Washington and Beijing continue to rattle the sector. The Trump administration is open to ByteDance, China’s tech giant, buying Nvidia’s H200 chips but wants strict conditions on their usage, Reuters reported. Nvidia responded, saying those conditions must be “commercially practical,” specifically pointing to a Know-Your-Customer rule aimed at blocking military applications. 4
Wednesday saw a grim forecast from Advanced Micro Devices, which weighed heavily on chip stocks. Bernstein analyst Stacy Rasgon noted that near-term AI figures “are not really inflecting” absent sales to China. 5
Lam supplies deposition and etch machines crucial for producing advanced chips — the factory equipment chipmakers snap up during capacity expansions. This connection boosts Lam in robust capex cycles but also puts the stock at risk when doubts arise over the speed of AI-related buildouts.
Lam kicked off the week on the back of a forecast that exceeded Wall Street’s revenue estimates, driven by robust demand for its chipmaking equipment, Reuters reported. 6
But the trade can flip quickly. Toolmakers might face sudden shipment halts if customers pull back on orders or export rules tighten. Investors, too, often reevaluate valuations sharply when AI hype cools off.
Traders will soon watch for any easing in the semiconductor selloff and whether Washington’s export-licensing talks solidify into tougher restrictions. For Lam, the focus turns to how seamlessly the operational handover unfolds.
March 6 marks the day Lord retires and Varadarajan steps in as COO. Investors will be closely watching to see if Lam’s shares hold steady or continue to fall along with the wider AI-related downturn.
