Lam Research Corporation (LRCX Quick QuoteLRCX - Free Report) is scheduled to release its third-quarter fiscal 2025 results on April 23. The Zacks Consensus Estimate for earnings is pegged at $1 per share, calling for growth of 28.2% from the figure reported in the year-ago quarter. The earnings figure has been revised a penny upward over the past 60 days. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

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For the third quarter of fiscal 2025, the company expects revenues of $4.65 billion (+/- $300 million). The Zacks Consensus Estimate is pegged at $4.64 billion, indicating 22.3% growth from the figure reported in the year-ago quarter.

Lam Research has an impressive earnings surprise history. In the last reported quarter, LRCX delivered an earnings surprise of 4.6%. The company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 6.9%.

Earnings Whispers for LRCX

Our proven model predicts an earnings beat for Lam Research this earnings season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +0.15%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: LRCX carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors Likely to Influence LRCX’s Quarterly Performance

Lam Research has been riding the wave of a strong rebound in the semiconductor industry, driven by the surging demand for memory and advanced AI applications. The rise in spending on AI and machine learning, particularly with the growing influence of Generative AI, is likely to have provided a significant boost to the company's performance in the fiscal third quarter. The increasing need for advanced AI-centric chips has become a key growth catalyst.

Heightened dynamic random access memory (DRAM) spending, especially in response to demand for high-bandwidth memory, is likely to have played in Lam Research's favor. The company's momentum in 3D DRAM and advanced packaging technologies is also expected to have added to its strong performance. At the same time, ongoing technological advancements are pushing NAND spending higher, which is likely to contribute to Lam’s quarterly results.

Lam Research’s focus on expanding semiconductor fabrication capabilities, along with its heavy investment in research and development, positions it well in a competitive landscape. Its innovation through Semiverse solutions, particularly in high-aspect-ratio memory hole etch for NAND, is likely to have fueled this progress. LRCX’s strategic investments in cutting-edge technologies are likely to have bolstered its performance in the foundry and logic segment, while the increasing adoption of 3D architectures is expected to have supported growth in its etch and deposition services.

The company’s robust suite of tools, which enable foundry logic inflections, is likely to have secured strong customer traction. With the accelerating deployment of 5G and the Internet of Things (IoT), Lam Research’s semiconductor and memory solutions remain in high demand, reinforcing its market position in the fiscal third quarter.

All these factors are likely to have driven growth in system revenues. The Zacks Consensus Estimate forecasts fiscal third-quarter system revenues at $2.94 billion, implying year-over-year growth of 22.6%, underscoring Lam Research’s continued strength in the evolving tech landscape. The consensus mark for the Customer Support segment’s third-quarter revenues is pegged at $1.71 billion, indicating a year-over-year increase of 22.7%.

LRCX Stock Price Performance & Valuation

Lam Research shares have plunged 26.5% over the past year, underperforming the Zacks Electronics – Semiconductors industry, which has risen 6.2%. The stock has also underperformed its industry peers, including Broadcom (AVGO Quick QuoteAVGO - Free Report) , QUALCOMM (QCOM Quick QuoteQCOM - Free Report) and Marvell Technology (MRVL Quick QuoteMRVL - Free Report) . Broadcom stock has soared 39.7% over the past year, while shares of QUALCOMM and Marvell Technology have plunged 14.7% and 17.8%, respectively.

One-Year Price Return Performance

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Let us look at the value Lam Research offers investors at current levels. Currently, LRCX is trading at a discount, with a forward 12-month P/E of 16.94X compared with the industry’s 21.71X. Compared with industry peers, the stock trades at lower multiples than Broadcom and Marvell Technology, while at higher multiple than QUALCOMM. At present, Broadcom, Marvell Technology and QUALCOMM have forward 12-month P/E multiples of 23.8X, 17.68X and 11.15X, respectively.

Forward 12-Month P/E Ratio

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Investment Thesis for Lam Research Stock

Lam Research has long been a pillar of the chip equipment world, especially in etch and deposition technology, which are critical for producing high-bandwidth memory (HBM) and advanced packaging technologies essential for AI workloads. These leading-edge technologies are helping it capitalize on the opportunities from the booming demand for AI and datacenter chips, which require advanced fabrication technologies.

In 2024, Lam Research’s shipments for gate-all-around nodes and advanced packaging exceeded $1 billion, and management expects this figure to triple to more than $3 billion by 2025. Additionally, the industry’s migration to backside power distribution and dry-resist processing presents further growth opportunities for Lam Research’s cutting-edge fabrication solutions.

Nonetheless, Lam Research is not immune to risks. U.S.-China trade tensions pose a significant challenge. China accounted for 31% of its second-quarter fiscal 2025 revenues, down from 37% in the prior quarter. During the last reported quarter earnings call, the company revealed that $700 million in expected sales from restricted Chinese customers will not materialize in 2025, creating a noticeable sales gap.

Additionally, declining demand for mature-node semiconductor equipment is weighing on Lam Research’s foundry business. Foundry revenues fell from 41% of system sales in the first quarter to 35% in the second quarter, reflecting weaker demand. With TSMC and other foundries slowing their mature-node spending, Lam Research’s growth in this segment could remain sluggish.

Conclusion: Hold Lam Research for Now

While geopolitical risks and mature-node weakness could create short-term headwinds, Lam Research’s discounted valuation, solid financial performance and strategic focus on AI-driven growth make it a compelling long-term hold. The company’s expanding market share in AI and datacenter fabrication, coupled with innovative product launches, strengthens its competitive positioning.