Lam Research (LRCX -1.85%) crushed Wall Street's expectations handsomely when it released its fiscal 2023 first-quarter results (for the three months ending Sept. 25, 2022) on Oct. 19, but there was something else that caught investors' attention.

Although Lam's near-term outlook is solid, the semiconductor equipment specialist points out that the curbs imposed by the U.S. government on the sales of chips to China could weigh heavily on the company's results in 2023. That's because the company relies on China for 30% of its business, and this is going to cost Lam between $2 billion and $2.5 billion in revenue in 2023. At the same time, the weak demand for memory chips will be another headwind for Lam next year.

But, surprisingly, Lam's stock is soaring following its earnings report, which indicates that investors remain upbeat about the company's prospects. Let's see why that may be the case.

Healthy order backlog bolsters Lam Research's results

Lam Research's September quarter revenue increased 18% year over year to $5.07 billion. Adjusted earnings jumped 25% over the prior-year period to $10.42 per share. Analysts would have settled for $9.57 per share in earnings on $4.92 billion in revenue, but Lam's robust deferred revenue base and existing orders helped it beat those numbers.

Lam was able to fulfill more orders last quarter as supply chain constraints eased. The company was struggling to fulfill orders earlier this year thanks to a shortage of components, which led to an increase in the backlog and deferred revenue. And now that it has more components available, Lam ramped up production and delivered solid results.

The good part is that Lam's deferred revenue increased once again last quarter to $2.8 billion, a jump of $550 million over the previous quarter. As deferred revenue refers to the money collected in advance for products or services that will be delivered later, the growth in this metric suggests that the demand for its semiconductor manufacturing equipment remains strong.

This also explains why the company's guidance was better than expectations. Lam anticipates $10 per share in adjusted earnings on $5.1 billion in revenue in the current quarter, ahead of the consensus estimate of $9.09 per share in earnings and $4.81 billion in revenue. Those numbers point toward a 17% year-over-year increase in the company's earnings on a 21% spike in revenue.

However, analysts are forecasting an increase of just 6% in Lam's revenue and earnings in fiscal 2023, suggesting that the company's growth could slow down big time as the year progresses. That's not surprising, given the hit that Lam expects to take from the restrictions on sales of chips to Chinese customers. CFO Doug Bettinger also warned of the impending slowdown on the latest earnings conference call:

With macro conditions weakening and wafer fab equipment spending declining, I expect deferred revenue and backlog levels will come down as we exit the December quarter.

Given all these headwinds and warnings, it was surprising to see Lam stock soar following its latest results. But a closer look indicates that Lam is sitting on a tremendous long-term opportunity.

Investors are focusing on the bigger picture

Lam Research gets most of its revenue by selling semiconductor manufacturing equipment to memory manufacturers. Specifically, 52% of its revenue came from the memory segment last quarter. While the near-term scenario in the memory industry won't be favorable for Lam Research due to excess supply and tepid demand, the long-term prospects appear solid.

Memory manufacturers such as Micron Technology are looking to spend huge amounts of money in the coming years to shore up their production capacity in the U.S. That's not surprising, as the market for memory chips is expected to clock 14.5% annual growth through 2028, hitting annual revenue of almost $361 billion compared to last year's estimate of $139 billion.

The demand for Lam's equipment should remain robust in the long run, as memory industry participants are likely to spend more money on boosting their capacity to meet the growing end-market demand. All this indicates why investors seem to be positive about Lam, despite the warnings issued by the company on its latest earnings call.

What's more, the stock is trading at just 11 times trailing earnings, which is quite cheap considering the impressive growth it's delivering. Lam also sports a dividend yield of 2% with a low payout ratio of 18%, giving investors yet another reason to buy the stock while it is still down. In all, Lam Research looks like a top semiconductor stock that could thrive in the long run. As such, savvy investors may want to keep accumulating it while it's trading at a cheap valuation.