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Lam research forecasts $5B Q2 2025 revenue with NAND upgrades leading growth
Apr. 23, 2025 9:41 PM ETLam Research Corporation (LRCX) StockAI-Generated Earnings Calls Insights

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Earnings Call Insights: Lam Research Corporation (LRCX) Q3 2025

Management View
CEO Tim Archer highlighted that Q3 2025 results exceeded guidance midpoints in revenue, gross margin, operating margin, and EPS, reflecting strong execution. Foundry revenues reached a record high, driven by advanced technology inflections, while gross margin achieved its highest level since the Novellus merger.
Archer emphasized the critical role of NAND upgrades in driving growth, with strong adoption of the company's HALO system and SPARC ALD tools in leading-edge foundry applications. He also cited momentum in DRAM and 3D NAND with advanced etch and deposition tools like Akara and ALTUS Halo systems.
Archer noted significant progress in the Customer Support Business Group (CSBG), particularly in upgrades for NAND technology conversions and new applications for DRAM and foundry logic customers.
CFO Doug Bettinger reported Q3 2025 revenue of $4.72 billion, an 8% increase from the prior quarter. Foundry represented 48% of systems revenue, a record in dollar terms. Gross margin was 49%, driven by operational efficiencies, while operating margin reached 32.8%.
Bettinger stated, "We achieved the highest quarterly gross margin percentage since our merger with Novellus in 2012," underscoring the benefits of a "close to customer" manufacturing strategy.
Outlook
For Q2 2025, Lam forecasts revenue of $5 billion, plus or minus $300 million. Guidance also includes gross margin of 49.5%, operating margin of 33.5%, and EPS of $1.20, plus or minus $0.10.
Archer reiterated confidence in Lam's ability to outperform overall WFE growth through served market expansion and share gains in advanced technology nodes like gate-all-around, backside power, and advanced packaging.
Financial Results
Q3 2025 revenue increased to $4.72 billion, up 8% sequentially.
Foundry revenue reached 48% of systems revenue, driven by advanced node spending in gate-all-around and advanced packaging.
Gross margin improved to 49%, reflecting better product mix and operational efficiency.
CSBG generated $1.7 billion in revenue, driven by record upgrades, particularly for NAND.
Operating expenses grew to $763 million, with 70% allocated to R&D for ongoing product differentiation.
Capital expenditures rose to $288 million, including investments in lab expansions in India and manufacturing facilities in the United States.
Q&A
C.J. Muse, Cantor Fitzgerald, inquired about the sustainability of NAND upgrades beyond Q2. Archer responded that Lam benefits from both tool upgrades and new tool deployments as customers transition to higher layer counts, with strong adoption of their Halo molybdenum process.
Timothy Arcuri, UBS, asked about measures to mitigate tariff impacts. Archer described Lam's flexible, global manufacturing strategy, positioned close to customers and supply chains, to adapt to changing trade conditions.
Harlan Sur, JPMorgan, probed gross margin sustainability amid potential tariff impacts. Bettinger noted that customer mix and product mix variability will cause fluctuations but highlighted operational improvements as a stabilizing factor.
Sentiment Analysis
Analysts expressed cautious optimism, focusing on NAND upgrade sustainability and tariff impacts. Questions emphasized potential risks to second-half revenue and gross margin sustainability.
Management displayed confidence in long-term growth drivers, reiterating the importance of investments in advanced technologies and operational efficiency for margin expansion.
Compared to Q2 2025, management's tone remained confident, though analysts pressed harder on risks related to macroeconomic conditions and customer spending trends.
Quarter-over-Quarter Comparison
Revenue grew from $4.38 billion in Q2 2025 to $4.72 billion in Q3 2025, with significant contributions from foundry and NAND markets.
Gross margin increased from 47.5% to 49%, driven by operational efficiencies and stronger product mix.
CSBG revenue saw a slight sequential decline but recorded year-over-year growth of 21%, highlighting strength in NAND upgrades.
Management's tone remained consistent, emphasizing strategic investments and long-term growth opportunities.
Risks and Concerns
Management acknowledged macroeconomic uncertainty and tariff-related risks but did not report meaningful changes in customer plans.
Analysts raised concerns about second-half revenue sustainability, particularly in light of potential shifts in customer spending and regional restrictions.
Tariff impacts were cited as a potential headwind for gross margin performance in future quarters.
Final Takeaway
Lam Research demonstrated strong Q3 2025 performance, driven by record foundry revenues and continued momentum in advanced technology markets. Guidance for Q2 2025 reflects confidence in sustained growth, underpinned by NAND upgrades and strategic investments in leading-edge technologies. Management’s focus on operational efficiency and product differentiation positions Lam well for long-term outperformance, though analysts remain watchful of macroeconomic and tariff-related risks.

Read the full Earnings Call Transcript

More on Lam Research
Lam Research Corporation (LRCX) Q3 2025 Earnings Call Transcript
Lam Research Corporation 2025 Q3 - Results - Earnings Call Presentation
Lam Research: Tides Have Turned, Buy This Semiconductor Refurbisher
Lam Research jumps as Q3 results, guidance top Wall Street estimates
Nasdaq-100 gains amid broader market rally; See the top 10 performing names
Seeking Alpha's Disclaimer: The earnings call insights are compilations of earnings call transcripts and other content available on the Seeking Alpha website. The insights are generated by an AI tool and have not been curated or reviewed by editors. Due to inherent limitations in using AI-based tools, the accuracy, completeness, or timeliness of the earnings call insights cannot be guaranteed. Please see full earnings call transcripts here. The earnings call insights are intended for informational purposes only. Seeking Alpha does not take account of your objectives or your financial situation and does not offer any personalized investment advice. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank.

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Bruce Bohannon
24 Apr. 2025, 8:53 AM

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Comments (6.39K)
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Nice AI Insight Generation.

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More Trending News
About LRCX Stock
Symbol Last Price % Chg
LRCX
71.42 0.73%
Post 71.64 0.31%
Chart
Combination chart with 2 data series.
View as data table, Chart
The chart has 1 X axis displaying Time. Data ranges from 2025-04-21 09:30:00 to 2025-04-25 16:00:00.
The chart has 1 Y axis displaying values. Data ranges from 61.2 to 72.27.
End of interactive chart.
Market Cap
$90.96B
PE (FWD)
17.93
Yield
1.26%
Rev Growth (YoY)
20.33%
Short Interest
1.84%
Prev. Close
$70.90
LRCX Ratings
Source Rating Score
SA Analysts
Buy
Rating: Buy4.12
Wall Street
Buy
Rating: Buy4.33
Quant
Hold
Rating: Hold3.41
Quant Ranking
Sector
Industry
Ranked Overall
Ranked in Sector
Ranked in Industry
Related Stocks
Symbol Last Price % Chg
LRCX 71.42 0.73%
Lam Research Corporation Post. 71.64 0.31%
KLAC 694.61 0.75%
KLA Corporation Post. 696.69 0.30%
AMAT 151.55 0.92%
Applied Materials, Inc. Post. 151.54 -0.01%
ASMIY 492.05 3.10%
ASM International NV Post. 492.05 0.00%
TER 77.12 -0.23%
Teradyne, Inc. Post. 77.25 0.17%

Commodities
SymbolSort by Symbol in descending order Price % Chg
RIO
60.56
-1.83%
UNG
15.70
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Lam research forecasts $5B Q2 2025 revenue with NAND upgrades leading growth

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Lam research forecasts $5B Q2 2025 revenue with NAND upgrades leading growth
Apr. 23, 2025 9:41 PM ETLam Research Corporation (LRCX) StockAI-Generated Earnings Calls Insights

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Earnings Call Insights: Lam Research Corporation (LRCX) Q3 2025

Management View
CEO Tim Archer highlighted that Q3 2025 results exceeded guidance midpoints in revenue, gross margin, operating margin, and EPS, reflecting strong execution. Foundry revenues reached a record high, driven by advanced technology inflections, while gross margin achieved its highest level since the Novellus merger.
Archer emphasized the critical role of NAND upgrades in driving growth, with strong adoption of the company's HALO system and SPARC ALD tools in leading-edge foundry applications. He also cited momentum in DRAM and 3D NAND with advanced etch and deposition tools like Akara and ALTUS Halo systems.
Archer noted significant progress in the Customer Support Business Group (CSBG), particularly in upgrades for NAND technology conversions and new applications for DRAM and foundry logic customers.
CFO Doug Bettinger reported Q3 2025 revenue of $4.72 billion, an 8% increase from the prior quarter. Foundry represented 48% of systems revenue, a record in dollar terms. Gross margin was 49%, driven by operational efficiencies, while operating margin reached 32.8%.
Bettinger stated, "We achieved the highest quarterly gross margin percentage since our merger with Novellus in 2012," underscoring the benefits of a "close to customer" manufacturing strategy.
Outlook
For Q2 2025, Lam forecasts revenue of $5 billion, plus or minus $300 million. Guidance also includes gross margin of 49.5%, operating margin of 33.5%, and EPS of $1.20, plus or minus $0.10.
Archer reiterated confidence in Lam's ability to outperform overall WFE growth through served market expansion and share gains in advanced technology nodes like gate-all-around, backside power, and advanced packaging.
Financial Results
Q3 2025 revenue increased to $4.72 billion, up 8% sequentially.
Foundry revenue reached 48% of systems revenue, driven by advanced node spending in gate-all-around and advanced packaging.
Gross margin improved to 49%, reflecting better product mix and operational efficiency.
CSBG generated $1.7 billion in revenue, driven by record upgrades, particularly for NAND.
Operating expenses grew to $763 million, with 70% allocated to R&D for ongoing product differentiation.
Capital expenditures rose to $288 million, including investments in lab expansions in India and manufacturing facilities in the United States.
Q&A
C.J. Muse, Cantor Fitzgerald, inquired about the sustainability of NAND upgrades beyond Q2. Archer responded that Lam benefits from both tool upgrades and new tool deployments as customers transition to higher layer counts, with strong adoption of their Halo molybdenum process.
Timothy Arcuri, UBS, asked about measures to mitigate tariff impacts. Archer described Lam's flexible, global manufacturing strategy, positioned close to customers and supply chains, to adapt to changing trade conditions.
Harlan Sur, JPMorgan, probed gross margin sustainability amid potential tariff impacts. Bettinger noted that customer mix and product mix variability will cause fluctuations but highlighted operational improvements as a stabilizing factor.
Sentiment Analysis
Analysts expressed cautious optimism, focusing on NAND upgrade sustainability and tariff impacts. Questions emphasized potential risks to second-half revenue and gross margin sustainability.
Management displayed confidence in long-term growth drivers, reiterating the importance of investments in advanced technologies and operational efficiency for margin expansion.
Compared to Q2 2025, management's tone remained confident, though analysts pressed harder on risks related to macroeconomic conditions and customer spending trends.
Quarter-over-Quarter Comparison
Revenue grew from $4.38 billion in Q2 2025 to $4.72 billion in Q3 2025, with significant contributions from foundry and NAND markets.
Gross margin increased from 47.5% to 49%, driven by operational efficiencies and stronger product mix.
CSBG revenue saw a slight sequential decline but recorded year-over-year growth of 21%, highlighting strength in NAND upgrades.
Management's tone remained consistent, emphasizing strategic investments and long-term growth opportunities.
Risks and Concerns
Management acknowledged macroeconomic uncertainty and tariff-related risks but did not report meaningful changes in customer plans.
Analysts raised concerns about second-half revenue sustainability, particularly in light of potential shifts in customer spending and regional restrictions.
Tariff impacts were cited as a potential headwind for gross margin performance in future quarters.
Final Takeaway
Lam Research demonstrated strong Q3 2025 performance, driven by record foundry revenues and continued momentum in advanced technology markets. Guidance for Q2 2025 reflects confidence in sustained growth, underpinned by NAND upgrades and strategic investments in leading-edge technologies. Management’s focus on operational efficiency and product differentiation positions Lam well for long-term outperformance, though analysts remain watchful of macroeconomic and tariff-related risks.

Read the full Earnings Call Transcript

More on Lam Research
Lam Research Corporation (LRCX) Q3 2025 Earnings Call Transcript
Lam Research Corporation 2025 Q3 - Results - Earnings Call Presentation
Lam Research: Tides Have Turned, Buy This Semiconductor Refurbisher
Lam Research jumps as Q3 results, guidance top Wall Street estimates
Nasdaq-100 gains amid broader market rally; See the top 10 performing names
Seeking Alpha's Disclaimer: The earnings call insights are compilations of earnings call transcripts and other content available on the Seeking Alpha website. The insights are generated by an AI tool and have not been curated or reviewed by editors. Due to inherent limitations in using AI-based tools, the accuracy, completeness, or timeliness of the earnings call insights cannot be guaranteed. Please see full earnings call transcripts here. The earnings call insights are intended for informational purposes only. Seeking Alpha does not take account of your objectives or your financial situation and does not offer any personalized investment advice. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank.

1
Share

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Comment
(1)
Recommended For You
Comments (1)
Sort by
Newest

Axon Investment Research's avatar
Have a tip? Submit confidentially to our News team. Found a factual error? Report here.

B
Bruce Bohannon
24 Apr. 2025, 8:53 AM

Investing Group
Comments (6.39K)
|
Nice AI Insight Generation.

Reply

Like
More Trending News
About LRCX Stock
Symbol Last Price % Chg
LRCX
71.42 0.73%
Post 71.64 0.31%
Chart
Combination chart with 2 data series.
View as data table, Chart
The chart has 1 X axis displaying Time. Data ranges from 2025-04-21 09:30:00 to 2025-04-25 16:00:00.
The chart has 1 Y axis displaying values. Data ranges from 61.2 to 72.27.
End of interactive chart.
Market Cap
$90.96B
PE (FWD)
17.93
Yield
1.26%
Rev Growth (YoY)
20.33%
Short Interest
1.84%
Prev. Close
$70.90
LRCX Ratings
Source Rating Score
SA Analysts
Buy
Rating: Buy4.12
Wall Street
Buy
Rating: Buy4.33
Quant
Hold
Rating: Hold3.41
Quant Ranking
Sector
Industry
Ranked Overall
Ranked in Sector
Ranked in Industry
Related Stocks
Symbol Last Price % Chg
LRCX 71.42 0.73%
Lam Research Corporation Post. 71.64 0.31%
KLAC 694.61 0.75%
KLA Corporation Post. 696.69 0.30%
AMAT 151.55 0.92%
Applied Materials, Inc. Post. 151.54 -0.01%
ASMIY 492.05 3.10%
ASM International NV Post. 492.05 0.00%
TER 77.12 -0.23%
Teradyne, Inc. Post. 77.25 0.17%

Commodities
SymbolSort by Symbol in descending order Price % Chg
RIO
60.56
-1.83%
UNG
15.70
1.29%
Seeking Alpha - Power to Investors
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Learn About Investing Groups
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Value Investing
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Tech
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Consumer
Utilities
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Retail Stocks
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S&P 500
Nasdaq
Gold
Bitcoin
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Today's Market
US Economy
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Bond ETFs
Commodity ETFs
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Growth vs. Value ETFs
Market Cap ETFs
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SPACs
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M&A
US Economy
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News by Sector
Consumer
Energy
Financials
Healthcare
Tech
Earnings
Earnings Calendar
Earnings News
Earnings Analysis
Earnings Calls Transcripts
Subscription Support: 1-347-509-6837
Contact Us
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© 2025 Seeking Alpha
Go back

Amazon: Ignore The Noise, This Stock Is Ridiculously Cheap (Rating Upgrade)
Audio length
01:09
/
00:00
Change Playback Speed1x





Volume in percent

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Home page Seeking Alpha - Power to Investors

Show More
Lam research forecasts $5B Q2 2025 revenue with NAND upgrades leading growth

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Lam research forecasts $5B Q2 2025 revenue with NAND upgrades leading growth
Apr. 23, 2025 9:41 PM ETLam Research Corporation (LRCX) StockAI-Generated Earnings Calls Insights

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Earnings Call Insights: Lam Research Corporation (LRCX) Q3 2025

Management View
CEO Tim Archer highlighted that Q3 2025 results exceeded guidance midpoints in revenue, gross margin, operating margin, and EPS, reflecting strong execution. Foundry revenues reached a record high, driven by advanced technology inflections, while gross margin achieved its highest level since the Novellus merger.
Archer emphasized the critical role of NAND upgrades in driving growth, with strong adoption of the company's HALO system and SPARC ALD tools in leading-edge foundry applications. He also cited momentum in DRAM and 3D NAND with advanced etch and deposition tools like Akara and ALTUS Halo systems.
Archer noted significant progress in the Customer Support Business Group (CSBG), particularly in upgrades for NAND technology conversions and new applications for DRAM and foundry logic customers.
CFO Doug Bettinger reported Q3 2025 revenue of $4.72 billion, an 8% increase from the prior quarter. Foundry represented 48% of systems revenue, a record in dollar terms. Gross margin was 49%, driven by operational efficiencies, while operating margin reached 32.8%.
Bettinger stated, "We achieved the highest quarterly gross margin percentage since our merger with Novellus in 2012," underscoring the benefits of a "close to customer" manufacturing strategy.
Outlook
For Q2 2025, Lam forecasts revenue of $5 billion, plus or minus $300 million. Guidance also includes gross margin of 49.5%, operating margin of 33.5%, and EPS of $1.20, plus or minus $0.10.
Archer reiterated confidence in Lam's ability to outperform overall WFE growth through served market expansion and share gains in advanced technology nodes like gate-all-around, backside power, and advanced packaging.
Financial Results
Q3 2025 revenue increased to $4.72 billion, up 8% sequentially.
Foundry revenue reached 48% of systems revenue, driven by advanced node spending in gate-all-around and advanced packaging.
Gross margin improved to 49%, reflecting better product mix and operational efficiency.
CSBG generated $1.7 billion in revenue, driven by record upgrades, particularly for NAND.
Operating expenses grew to $763 million, with 70% allocated to R&D for ongoing product differentiation.
Capital expenditures rose to $288 million, including investments in lab expansions in India and manufacturing facilities in the United States.
Q&A
C.J. Muse, Cantor Fitzgerald, inquired about the sustainability of NAND upgrades beyond Q2. Archer responded that Lam benefits from both tool upgrades and new tool deployments as customers transition to higher layer counts, with strong adoption of their Halo molybdenum process.
Timothy Arcuri, UBS, asked about measures to mitigate tariff impacts. Archer described Lam's flexible, global manufacturing strategy, positioned close to customers and supply chains, to adapt to changing trade conditions.
Harlan Sur, JPMorgan, probed gross margin sustainability amid potential tariff impacts. Bettinger noted that customer mix and product mix variability will cause fluctuations but highlighted operational improvements as a stabilizing factor.
Sentiment Analysis
Analysts expressed cautious optimism, focusing on NAND upgrade sustainability and tariff impacts. Questions emphasized potential risks to second-half revenue and gross margin sustainability.
Management displayed confidence in long-term growth drivers, reiterating the importance of investments in advanced technologies and operational efficiency for margin expansion.
Compared to Q2 2025, management's tone remained confident, though analysts pressed harder on risks related to macroeconomic conditions and customer spending trends.
Quarter-over-Quarter Comparison
Revenue grew from $4.38 billion in Q2 2025 to $4.72 billion in Q3 2025, with significant contributions from foundry and NAND markets.
Gross margin increased from 47.5% to 49%, driven by operational efficiencies and stronger product mix.
CSBG revenue saw a slight sequential decline but recorded year-over-year growth of 21%, highlighting strength in NAND upgrades.
Management's tone remained consistent, emphasizing strategic investments and long-term growth opportunities.
Risks and Concerns
Management acknowledged macroeconomic uncertainty and tariff-related risks but did not report meaningful changes in customer plans.
Analysts raised concerns about second-half revenue sustainability, particularly in light of potential shifts in customer spending and regional restrictions.
Tariff impacts were cited as a potential headwind for gross margin performance in future quarters.
Final Takeaway
Lam Research demonstrated strong Q3 2025 performance, driven by record foundry revenues and continued momentum in advanced technology markets. Guidance for Q2 2025 reflects confidence in sustained growth, underpinned by NAND upgrades and strategic investments in leading-edge technologies. Management’s focus on operational efficiency and product differentiation positions Lam well for long-term outperformance, though analysts remain watchful of macroeconomic and tariff-related risks.

Read the full Earnings Call Transcript

More on Lam Research
Lam Research Corporation (LRCX) Q3 2025 Earnings Call Transcript
Lam Research Corporation 2025 Q3 - Results - Earnings Call Presentation
Lam Research: Tides Have Turned, Buy This Semiconductor Refurbisher
Lam Research jumps as Q3 results, guidance top Wall Street estimates
Nasdaq-100 gains amid broader market rally; See the top 10 performing names
Seeking Alpha's Disclaimer: The earnings call insights are compilations of earnings call transcripts and other content available on the Seeking Alpha website. The insights are generated by an AI tool and have not been curated or reviewed by editors. Due to inherent limitations in using AI-based tools, the accuracy, completeness, or timeliness of the earnings call insights cannot be guaranteed. Please see full earnings call transcripts here. The earnings call insights are intended for informational purposes only. Seeking Alpha does not take account of your objectives or your financial situation and does not offer any personalized investment advice. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank.

1
Share

Save

Print
Comment
(1)
Recommended For You
Comments (1)
Sort by
Newest

Axon Investment Research's avatar
Have a tip? Submit confidentially to our News team. Found a factual error? Report here.

B
Bruce Bohannon
24 Apr. 2025, 8:53 AM

Investing Group
Comments (6.39K)
|
Nice AI Insight Generation.

Reply

Like
More Trending News
About LRCX Stock
Symbol Last Price % Chg
LRCX
71.42 0.73%
Post 71.64 0.31%
Chart
Combination chart with 2 data series.
View as data table, Chart
The chart has 1 X axis displaying Time. Data ranges from 2025-04-21 09:30:00 to 2025-04-25 16:00:00.
The chart has 1 Y axis displaying values. Data ranges from 61.2 to 72.27.
End of interactive chart.
Market Cap
$90.96B
PE (FWD)
17.93
Yield
1.26%
Rev Growth (YoY)
20.33%
Short Interest
1.84%
Prev. Close
$70.90
LRCX Ratings
Source Rating Score
SA Analysts
Buy
Rating: Buy4.12
Wall Street
Buy
Rating: Buy4.33
Quant
Hold
Rating: Hold3.41
Quant Ranking
Sector
Industry
Ranked Overall
Ranked in Sector
Ranked in Industry
Related Stocks
Symbol Last Price % Chg
LRCX 71.42 0.73%
Lam Research Corporation Post. 71.64 0.31%
KLAC 694.61 0.75%
KLA Corporation Post. 696.69 0.30%
AMAT 151.55 0.92%
Applied Materials, Inc. Post. 151.54 -0.01%
ASMIY 492.05 3.10%
ASM International NV Post. 492.05 0.00%
TER 77.12 -0.23%
Teradyne, Inc. Post. 77.25 0.17%

Commodities
SymbolSort by Symbol in descending order Price % Chg
RIO
60.56
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If there is any week for the rally to fade, it would be this one. Bull market corrections typically last around 2-4 weeks, and this would be the first week for a relief rally to break down. I still believe we are going to retest around ~5750 SPX before making new bear market lows if that is the case.

Macro events: Jobs week, PCE
Earnings: AAPL, AMZN, MSFT, META, PLTR, V + MA, BRK.B

Bull:
QQQ- 490 ish retest incoming. This will be the key determinant to whether or not a bear market happens. Bear market scenario bottoms end of sept/early oct. If not, the correction is over since this has been a normal V-shaped recovery

Big tech: Bullish on MSFT favorable for a BPS. AAPL is a toss-up, fundamentals don’t support price improvement but sentiment does. AMZN & META have suffered large corrections, which make BPS favorable, but both will be heavily hit by tariffs. META especially tends to be conservative and guides quarterly, which should limit upside.

AVGO- Highest conviction bullish bet. Earnings aren’t until June, but I expect AVGO to lead this recovery. GOOGL, VRT, LRCX all gave strong guidance suggesting AVGO will impress significantly.

PLTR- Decent shelter against tariffs + push for government efficiency. Expecting strong results and another push higher

BRK.B- Highly resilient to economic downturns, tariffs, and inflation. Price is stretched. Wouldn’t hurt to enter but MSFT is a better bet.

CRM- If MSFT does well like I think it should, rotate into CRM. 350 BPS or long dated leaps should work well here.

Neutral:
V+ MA- expecting strong current quarter results. Guidance should be mixed, but market sentiment should be enough to push these higher



Bear:
——————————
Positions– :



5/2
<220 AMZN .21
<52 >50 TQQQ BACKRATIO .64

5/16
>450 QQQ 2.51, <480 1.16
SOXL >10 1.07 <10 .29
>310 GLD 2.42, <310 1.74
>190 AMZN .83, <210 .42
>390 MSFT 2.07, <430 .37
>55 TEM 2.23

5/23


5/30


6/20
COST >1000 5.9,
^ <1100 3.1

>990 NFLX 2.76


>45 TQQQ 1.26, <60 1.16
^<60 .72


7/18

>1060 <1100 COST 15.63



>40 VIX -.68

8/15
>1060 COST 10.14, <1100 5.28

9/19
<71 TQQQ .75

12/19


1/16/26

>500 APP 49.7, <510 4.81
>1060 COST 8.84 (also Asia’s acc), <1200 3.52
>1060 NFLX 10.02
TQQQ >20 1.99
<240 AMZN 3.54


3/20/26
>250 AMZN 6.34+.52
>1050 NFLX 12.28, <1500 1.36
>1100 <1360 COST 13.86, >1040 <1260 14.57


6/18/26
>1000 COST .92

12/18/26

1/15/27
>35 TQQQ -30.39

12/17/27
>150 AMZN -78.05
>195-200 -4.68
———————————

-AAII Asset allocation- 75% stocks, 15% cash marks a top
-Double is a bubble over a 3 year rolling return for indexes. >35 VIX - historically 100% 1 month positive, >27 almost perfect in similar timeframe.
—--------------------------------------
OPEX
-Jan, Feb, and July OPEX historically negative while April is positive
-Seasonality: Feb- AXON, JUL- XLK, NOV- COST






PostPosted by: Perma Bear Wed Apr 30, 2025 @ 05:31am 0 comments [add]



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The Fed's Beige Book Raises The Alarm
Apr. 29, 2025 1:32 PM ETS&P 500 Index (SPX), SP500, DJI, NDXACTV, AFMC, AFSM, ARKK, AVUV, BAPR, IVOO, IVOV, IVV, IVW, IWC, IWM, IWN, IWO, IWP, IWR, IWS, IYY, QQQ, SPLV, SPMD, SPMO, SPMV, SPSM, SPUS, SPUU, SPVM, SPVU, SPXE, SPXL, SPXN, SPXS, SPXT, SPXU, SPXV, SPY, SPYD, SPYG, SPYV, SPYX, SQEW, SQLV, SSO, SSPY, SVAL, SYLD, TMDV, TPHD, TPLC, TPSC, UAUG, UJAN, UMAR, UMAY, UOCT, UPRO, USMC, USMF, USVM, MAGS, SPX, SP500, DJI, NDX

John Bowman
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Summary
The Federal Reserve's Beige Book reveals mixed economic activity across districts, with some growth and some declines, highlighting uncertainty, especially among importers.
Non-auto consumer spending is down, but vehicle and nondurable sales are up due to tariff-related price hikes; travel and international visitors are down.
Home sales have increased slightly with low inventory, commercial real estate sees slight expansion, and the energy sector shows modest growth.
The labor market and prices are a focus, with the Fed's Dual Mandate aiming for maximum employment and price stability amidst economic uncertainty and potential GDP contraction.
I go over the sum of the parts and how each district contributed to the overall picture, highlighting regionality in the economic trajectory of the U.S.
Fed Chair Jerome Powell Speaks At Economic Club Of Chicago

Vincent Alban/Getty Images News

Introduction
On April 23rd, the Federal Reserve published its latest edition of Summary of Commentary on Current Economic Conditions by Federal Reserve District, or the "Beige Book" as it's most-commonly known. The report is 56 pages, a little dense, and contains reports from each of the twelve districts, giving us a look into the whole picture, but also the regional contributions to each projection.

This is the latest edition since early March, and mid-January before that, and will have to be enough to hold us over until the next publication in early June. Here is the schedule for this year:

Beige Book Publication Dates
Federal Reserve

For reference, just for those unaware, the Federal Reserve is split into twelve districts. Here is a map of the districts and where the reserve banks are located.

Federal Reserve Districts
Federal Reserve Bank of Richmond

I regularly discuss the Federal Reserve Open Market Committee ("FOMC"), which dictate interest rates, when I cover the Fed. However, it's rare that I discuss the ongoings of the district banks, and if I do, it's usually only Fed Atlanta's GDPNow forecast.

In the Beige Book, each of the districts contributes their own data, which allows us to see regionality in economic data, but also to potentially spot trends starting in one district before they move to another, e.g., slowdowns in shipping on the West coast (San Francisco Fed) could lead to slowdowns in trucking in the midwestern (St. Louis Fed).

The National Summary
The report starts with a section of the same name, and covers the Fed's perspective on the "sum of the parts," where it weighs each of the twelve districts against each other. This is important to start with because the larger picture presented here is likely to affect the FOMC, which makes their next interest rate decision on May 7th.

Economic Activity
The Fed starts with a line about economic activity between March to April remaining steady, but notes higher uncertainty among importers. Regarding the districts, they wrote:

Just five Districts saw slight growth, three Districts noted activity was relatively unchanged, and the remaining four Districts reported slight to modest declines.

While the district growth was mixed across the board, there were several core observations made about the overall picture of economic growth that are significant.


Non-auto consumer spending was lower overall, on balance.

[H]owever, most Districts saw moderate to robust sales of vehicles and of some nondurables, generally attributed to a rush to purchase ahead of tariff-related price increases.

Both leisure and business travel were down, on balance, and several Districts noted a decline in international visitors.

Home sales rose somewhat, and many Districts continued to note low inventory levels.

Commercial real estate [sic] activity expanded slightly as multifamily propped up the industrial and office sectors. Loan demand was flat to modestly higher, on net.

Several Districts saw a deterioration in demand for non-financial services.

Transportation activity expanded modestly, on balance.

Manufacturing was mixed, but two-thirds of Districts said activity was little changed or had declined.

The energy sector experienced modest growth.

Agricultural conditions were fairly stable across multiple Districts.

Cuts to federal grants and subsidies along with declines in philanthropic donations caused gaps in services provided by many community organizations.

The outlook in several Districts worsened considerably as economic uncertainty, particularly surrounding tariffs, rose.

This isn't the first talk about downgrades to the Fed's outlook, as the FOMC published downward revisions of its predictions back in March, when they last met. They will release a new version of this on May 7th, but here is generally how the FOMC revised their projections, with negative revisions highlights. There were no positive revisions, only down or no change.

FOMC projections December to March
FOMC

Regarding economic growth projections, the Federal Reserve Bank of Atlanta's GDPNow figure shows a potential for a real contraction of 2.5%, meaning that figure is net inflation.

GDPNow
Federal Reserve Bank of Atlanta

Labor Market & Prices
Of course, the Federal Reserve has a "Dual Mandate" to follow. I write "of course" because effectively every speech or publication produced by the Federal Reserve system mentions this mandate. This "Dual Mandate" is to ensure maximum employment and price stability. While the interpretation of these things have changed over time, and different Fed chairs have re-defined these, we typically observe two metrics, inflation and unemployment, to track these goals.

Within those metrics, the Fed likes to employ the U-3 unemployment rate (or just called "unemployment" typically, as well as Core PCE, which is the personal consumption expenditures less food and energy.

Here is the last quarter-century for these two particular metrics, going back to 2000, with the shaded areas highlighting recessions, for context. This gives us a good idea of where we are, and it looks to be at an inflection point.

Chart
Data by YCharts
Employment
We are currently at "natural unemployment" levels, meaning that we consider what unemployment we do have currently to be a product of personal choice, or rather that most unemployed people are "between jobs." This is also called "frictional unemployment," which is considered healthy in economies where people can choose their jobs, and to leave jobs, freely.

Despite a recently (very slight) uptick in the unemployment metric, up to 4.2%, the activity is unevenly dispersed across the U.S. The Fed districts report in the Beige Book:


Employment was little changed to up slightly in most Districts, with one District reporting a modest increase, four reporting a slight increase, four reporting no change, and three reporting a slight decline.

This is a slight deterioration from the previous report with a few more Districts reporting declines. Hiring was generally slower for consumer-facing firms than for business-to-business firms. The most notable declines in headcount were in government roles or roles at organizations receiving government funding.

Several Districts reported that firms were taking a wait-and-see approach to employment, pausing or slowing hiring until there is more clarity on economic conditions. In addition, there were scattered reports of firms preparing for layoffs.

Most Districts and markets reported an improvement in overall labor availability, although there were some reports of constraints on labor supply resulting from shifting immigration policies in certain sectors and regions. Wages generally grew at a modest pace, as wage growth slowed from the previous report in multiple Districts.

Mixed data on employment was expected, as the last jobs report showed us. Until we see a marked change in unemployment to the upside, complete with non-governmental layoffs at the same size as governmental layoffs, I won't be too worried on this front.

Employment hasn't been the Fed's challenge over the past few years, especially since the post-COVID hiring boom made up for the changes that COVID-19 brought to the labor market. Even though the overall metric is elevated from its lows, that doesn't mean it isn't healthy, per se.

One thing to note is that firms are "taking a wait and see approach to employment," which means a slowing of hiring. While that doesn't necessarily mean that unemployment will go up, it does mean we are unlikely to be heading down from here, and should expect a continued stagnation of labor market conditions until business leaders come around to hiring again.

Prices
This has been the largest challenge for the Fed, especially with the inflation metrics hitting upwards of 8% back in 2022. Since raising rates to their peaks, and then beginning the slow descent starting last year, the Fed has become cautious about the new trade policy in the U.S.

On this topic, the Fed writes in the Beige Book:


Prices increased across Districts, with six characterizing price growth as modest and six characterizing it as moderate, similar to the previous report.

Most Districts noted that firms expected elevated input cost growth resulting from tariffs. Many firms have already received notices from suppliers that costs would be increasing. Firms reported adding tariff surcharges or shortening pricing horizons to account for uncertain trade policy. Most businesses expected to pass through additional costs to customers.

However, there were reports about margin compression amid increased costs, as demand remained tepid in some sectors, especially for consumer-facing firms.

I've been raising this alarm bell for some time; a 10% global tariff means a modest increase in the cost of goods for the consumer, as this duty will be passed on via price increases by the importing firms.

While some price shock will likely be absorbed by the exporter in the form of lower prices, domestic firms have been making it clear that they intend to absorb as little as possible, lest they cut into their profit margins.

While I am not expecting prices to surge because of the tariff situation outright, we may experience lowered supply, which will naturally lead to price hikes by the virtue of the similar levels of demand chasing lowered levels of supply.

This is one of the areas I am also waiting to see, as there is a lot of speculation on who will bend and by how much. It's unclear to me what will happen, other than we shouldn't expect prices to fall soon.

Highlights of Districts
At this point, the publication starts to go into the individual districts and their reports. Each bank very carefully picks its words, and do not necessarily report in a standard way. To make it clear to readers, I've taken the specific phrases they used for each of the "Big Three" metrics, economic activity, employment, and prices and highlighted them below.

District Bank Economic Activity Employment Prices
Boston "increased slightly" "edged up" "rose modestly"
New York "contracted modestly" "steady to up" "rising"
Philadelphia "declined modestly" "declined slightly" "grew modestly"
Cleveland "flat" "increased slightly" N/A
Richmond "grew slightly" "little changed" "moderate"
Atlanta "grew slightly" "flat" "increased modestly"
Chicago "little changed" "up slightly" "increased modestly"
St. Louis "unchanged" N/A N/A*
Minneapolis "lower" "declined" "moderate"
Kansas City "grew slightly" "stable" N/A**
Dallas "slowed" "fell slightly" "rose modestly"
San Francisco "slowed slightly" "fell slightly" "rose modestly"
* The Chicago Fed didn't address prices directly, but wrote: "Contacts expressed a lot of uncertainty and an elevated effort in estimating the impact of tariffs and ways to reduce cost increases and supply disruptions."

** The Kansas City Fed didn't address prices directly, but wrote: "Businesses indicated they were most likely to adjust pricing to adapt. Expectations of price growth rose at a robust rate, most pronounced in goods sectors."

Another way to view the data is to boil their statements down to positive or negative sentiments, in which we get the following scores (N/A counts as no change):

Economic Activity Employment Prices
Up 4 4 9
No Change 3 4 3
Down 5 4 0
It's interesting to see that there are no districts reporting lower prices, even idiosyncratically. This goes against pop-culture metric (and crypto project) Truflation, which attempts to estimate current inflation, as opposed to the Fed's backwards looking measures like CPI and PCE. Currently, it's estimating that our current inflation is actually only 1.5%.

Truflation graph
Truflation

It also would buck the current trend that CPI and PCE are on, still overall trending down after the COVID-19 supply shocks and helicopter money policy undertaken by two successive administrations in Washington fueled inflation up to over 9% at its peak.

Chart
Data by YCharts
If the Fed districts are to be believed, we should expect a reversal in the downward slope of this metric in successive readings, with the Fed estimating that it may take some time before the pricing sets in totally, as much of the catalyst for pricing isn't a consumer issue at first, it's just passed onto them later. That means that it takes time for these things to trickle down to the consumer themselves.

We should watch this carefully, as I was actually rather positive about the March CPI reading back in early April. I hope that the positivity wasn't misplaced, but we will see on May 13th, when the U.S. Bureau of Labor Statistics releases its next publication.

Conclusion
Ultimately, the Fed's Beige Book was telling of the fear that has permeated business leaders' thinking about future prices and the effect they will have on consumer demand. Fed districts across the board show mixed economic activity, mix employment, and universally rising or stagnant prices. Business leaders, those surveyed by the Fed districts, are uneasy, which is affecting their overall production and hiring. We are seeing these businesses take a "wait and see" approach to policy decisions that could dramatically affect their bottom lines.

The report, overall, seemed apprehensive. This is par for the course when major changes to trade policy occur, especially when businesses are put in reaction mode.

Currently, I'm also apprehensive, and have been shoring up cash. I recommend others do the same.

Thanks for reading.

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John Bowman
4.88K Followers
John "Jack" Bowman is a registered investment advisor, economics educator, research analyst, and commentator from Southern California. He mostly covers macroeconomics, income-focused investments, derivatives, alternatives, and portfolio management. "History does not repeat, but it does instruct." — Timothy Snyder, On Tyranny
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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.


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The chart has 1 X axis displaying Time. Data ranges from 2025-03-31 00:00:00 to 2025-04-30 00:00:00.
The chart has 1 Y axis displaying values. Data ranges from 4982.77031 to 5670.97362.
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About SPX Ticker
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SPX
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The chart has 1 X axis displaying Time. Data ranges from 2025-04-25 00:00:00 to 2025-04-30 05:20:00.
The chart has 1 Y axis displaying values. Data ranges from 5464.82 to 5573.55.
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