We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Lam Research Rallies 25% YTD: Is it Too Late to Buy the Stock?
Read MoreHide Full Article
Key Takeaways
Lam Research is up 25.3% YTD, outpacing the Zacks Electronics-Semiconductor industry's 5.1% gain.
Lam Research's growth is fueled by AI, data center demand and next-gen chip manufacturing tools.
LRCX trades at 22.7X forward P/E, well below the industry's 30.92X despite strong performance.
Lam Research Corporation (LRCX - Free Report) has had a strong run so far this year, rallying 25.3%. This is well ahead of the Zacks Electronics – Semiconductors industry, which has risen just 5.1% during the same period.
Lam Research stock has also moved ahead of several semiconductor peers, including Broadcom Inc. (AVGO - Free Report) , NVIDIA Corporation (NVDA - Free Report) and Advanced Micro Devices, Inc. (AMD - Free Report) . YTD, shares of Broadcom, NVIDIA and Advanced Micro Devices have risen 7.8%, 7.1% and 6.2%, respectively.
This outperformance shows that investors are confident about Lam Research’s future despite market challenges like trade tensions and geopolitical risks. In our view, the stock’s solid fundamentals support this optimism, and LRCX still looks like a good buy at current levels.
LRCX YTD Price Return Performance
Image Source: Zacks Investment Research
AI and Data Center Trends Drive LRCX’s Growth Story
Lam Research is in a good position to benefit from the growing demand for artificial intelligence (AI) and data center chips. These chips require advanced manufacturing steps, and LRCX supplies critical equipment for this, such as deposition and etching tools.
In 2024, Lam Research shipped more than $1 billion worth of products for next-generation chip nodes and packaging. The company expects this number to triple in 2025.
As the semiconductor industry shifts to new technologies like backside power distribution and dry-resist processing, Lam is well placed to gain. With AI investments picking up, Lam Research’s tools are essential to help chipmakers scale up production.
Lam Research’s Investments Are Delivering Results
Lam Research’s steady investments in research & development and new products are paying off. Its Cryo 3.0 technology has set new standards in the industry, and the Aether dry-resist system is being adopted, especially for high-bandwidth DRAM.
Expanding its manufacturing operations in Asia has also helped the company lower costs and improve margins. In the third quarter of fiscal 2025, Lam Research’s non-GAAP operating margin rose to 32.8%, up 210 basis points from last year. That’s impressive, considering the tough conditions in the semiconductor market.
Financials Show Lam Research’s Strength
Lam Research’s latest financial results for the third quarter of fiscal 2025 confirm its ability to execute well, even in uncertain times. Revenues rose 24.5% year over year to $4.72 billion, while non-GAAP EPS (adjusted for the stock split) jumped 33.5%. Strong demand from memory and logic customers, along with tight cost control, helped the company beat expectations on both the top and bottom lines.
Lam Research’s consistent performance reinforces investor trust in its long-term business model and earnings stability. The stock has an impressive history of beating earnings estimates. LRCX surpassed the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 6.1%.
Lam Research Corporation Price, Consensus and EPS Surprise
Even after this year’s rally, Lam Research stock doesn’t look expensive. LRCX currently trades at a forward price-to-earnings (P/E) multiple of 22.7X, which is significantly lower than the industry’s 30.91X. The company’s discounted valuation multiple aligns with its long-term growth potential.
Image Source: Zacks Investment Research
It is also cheaper than major semiconductor players, including Advanced Micro Devices, NVIDIA and Broadcom. At present, Advanced Micro Devices, NVIDIA and Broadcom have forward 12-month P/E multiples of 27.12X, 30.16X and 32.56X, respectively.
Bottom Line: Lam Research Still Looks Like a Buy
Lam’s reasonable valuation, strong financials and clear focus on AI-related growth make it a good investment choice right now. Its market position in AI and data center chipmaking, combined with ongoing innovation, should keep driving long-term gains.
Image: Bigstock
Lam Research Rallies 25% YTD: Is it Too Late to Buy the Stock?
Key Takeaways
Lam Research Corporation (LRCX - Free Report) has had a strong run so far this year, rallying 25.3%. This is well ahead of the Zacks Electronics – Semiconductors industry, which has risen just 5.1% during the same period.
Lam Research stock has also moved ahead of several semiconductor peers, including Broadcom Inc. (AVGO - Free Report) , NVIDIA Corporation (NVDA - Free Report) and Advanced Micro Devices, Inc. (AMD - Free Report) . YTD, shares of Broadcom, NVIDIA and Advanced Micro Devices have risen 7.8%, 7.1% and 6.2%, respectively.
This outperformance shows that investors are confident about Lam Research’s future despite market challenges like trade tensions and geopolitical risks. In our view, the stock’s solid fundamentals support this optimism, and LRCX still looks like a good buy at current levels.
LRCX YTD Price Return Performance
Image Source: Zacks Investment Research
AI and Data Center Trends Drive LRCX’s Growth Story
Lam Research is in a good position to benefit from the growing demand for artificial intelligence (AI) and data center chips. These chips require advanced manufacturing steps, and LRCX supplies critical equipment for this, such as deposition and etching tools.
In 2024, Lam Research shipped more than $1 billion worth of products for next-generation chip nodes and packaging. The company expects this number to triple in 2025.
As the semiconductor industry shifts to new technologies like backside power distribution and dry-resist processing, Lam is well placed to gain. With AI investments picking up, Lam Research’s tools are essential to help chipmakers scale up production.
Lam Research’s Investments Are Delivering Results
Lam Research’s steady investments in research & development and new products are paying off. Its Cryo 3.0 technology has set new standards in the industry, and the Aether dry-resist system is being adopted, especially for high-bandwidth DRAM.
Expanding its manufacturing operations in Asia has also helped the company lower costs and improve margins. In the third quarter of fiscal 2025, Lam Research’s non-GAAP operating margin rose to 32.8%, up 210 basis points from last year. That’s impressive, considering the tough conditions in the semiconductor market.
Financials Show Lam Research’s Strength
Lam Research’s latest financial results for the third quarter of fiscal 2025 confirm its ability to execute well, even in uncertain times. Revenues rose 24.5% year over year to $4.72 billion, while non-GAAP EPS (adjusted for the stock split) jumped 33.5%. Strong demand from memory and logic customers, along with tight cost control, helped the company beat expectations on both the top and bottom lines.
Lam Research’s consistent performance reinforces investor trust in its long-term business model and earnings stability. The stock has an impressive history of beating earnings estimates. LRCX surpassed the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 6.1%.
Lam Research Corporation Price, Consensus and EPS Surprise
Lam Research Corporation price-consensus-eps-surprise-chart | Lam Research Corporation Quote
LRCX’s Valuation Still Reasonable After Rally
Even after this year’s rally, Lam Research stock doesn’t look expensive. LRCX currently trades at a forward price-to-earnings (P/E) multiple of 22.7X, which is significantly lower than the industry’s 30.91X. The company’s discounted valuation multiple aligns with its long-term growth potential.
Image Source: Zacks Investment Research
It is also cheaper than major semiconductor players, including Advanced Micro Devices, NVIDIA and Broadcom. At present, Advanced Micro Devices, NVIDIA and Broadcom have forward 12-month P/E multiples of 27.12X, 30.16X and 32.56X, respectively.
Bottom Line: Lam Research Still Looks Like a Buy
Lam’s reasonable valuation, strong financials and clear focus on AI-related growth make it a good investment choice right now. Its market position in AI and data center chipmaking, combined with ongoing innovation, should keep driving long-term gains.
LRCX carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.