Lam Research and Applied Materials belong to our 10 Best AI Infrastructure Stocks to Buy for the Long Term. Both return cash while investing in semiconductor equipment, but the latest cash statements give Applied Materials, Inc. (NASDAQ:AMAT) more room after shareholder payouts than Lam Research Corporation (NASDAQ:LRCX). The comparison changes when a single quarter is widened to a full year.
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Compare payouts after investment
Lam generated $1.457 billion of operating cash in its quarter ended June 28. Subtracting $188.8 million spent on capital expenditure and intangible assets leaves $1.268 billion. Treasury-stock purchases, including excise tax, were $246.6 million, and dividends were $325.3 million. Together, those payments consumed 45.1% of the residual cash.
Applied generated $3.037 billion of operating cash in its quarter ended July 26. After $707 million of capital expenditure, $2.330 billion remained. Repurchases of $440 million and dividends of $420 million consumed 36.9%. Applied therefore retained a larger share of cash after investment and payouts in these latest, differently dated quarters.
That is coverage of actual payments. Buyback authorizations do not require immediate spending. Both companies can adjust repurchases when equipment demand or investment needs change; dividends and buybacks should not be treated as identical commitments.
Lam’s full-year record changes the picture
For its fiscal year ended June 28, Lam generated $5.858 billion of operating cash and spent $966.4 million on capital expenditure and intangibles, leaving $4.891 billion. Repurchases and dividends totaled $5.122 billion, exceeding that residual by about $231 million. Its restrained final quarter therefore did not mean the full year’s payouts were entirely covered by that year’s cash after investment.
This does not establish financial distress: accumulated cash can fund distributions, and working-capital timing affects annual cash generation. It does mean investors should test payout coverage across periods.
On October 16, the trailing free-cash-flow multiples were at 69 for Lam and 59 for Applied. A better-covered payout does not automatically make either stock cheap. Our equipment analysis asks when faster growth fails to justify a higher cash-flow price. Investment timing and working capital can move those historical multiples sharply.
Q2 2026 hedge-fund holders rose to 139 from 123 for Lam and slipped to 137 from 138 for Applied. Arrowstreet reduced Lam shares 7%; Coatue reduced Applied shares 20%. The tracked fund population changed between quarters. September 30 short interest was 2.1% and 1.7% of float, respectively.
Applied has the stronger latest-quarter payout coverage on this measure. Lam’s full-year excess makes sustained collections and disciplined repurchases more important. Lam could improve coverage through stronger cash conversion or lower payouts; Applied could lose its advantage if investment rises faster than collections. Investors should watch cash after investment across several quarters, alongside the price paid for that cash.
