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LRCX vs. TSM: Which Semiconductor Stock Is the Better Bet Right Now?
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Key Takeaways
Lam Research's Q4 revenues jumped 34% and EPS rose 64%, fueled by AI-related chip demand.
TSM's Q2 revenues surged 44% and EPS climbed 61%, but rising costs and geopolitical tensions pose challenges.
LRCX's steady growth profile makes it a stronger bet than Taiwan Semiconductor.
Lam Research Corporation (LRCX - Free Report) and Taiwan Semiconductor Manufacturing Company (TSM - Free Report) are two powerhouses at the heart of the global semiconductor ecosystem. Taiwan Semiconductor, based in Taiwan and also known as TSMC, is the largest contract chipmaker globally. Meanwhile, Lam Research makes the equipment that chipmakers like TSMC use to produce those chips. Both companies are crucial to the tech supply chain and have seen strong demand in recent years.
Both companies are benefiting from the rise of AI, but their business models, risk profiles and long-term outlooks differ. Let’s break down how each company is performing and which one looks like the better investment right now.
The Case for Lam Research Stock
Lam Research is capitalizing on AI trends. It builds the tools chipmakers need to manufacture next-generation semiconductors, including high-bandwidth memory (HBM) and chips used in advanced packaging. These technologies are vital for powering AI and cloud data centers.
Lam Research’s products are not only critical but also innovative. For example, its ALTUS ALD tool uses molybdenum to improve speed and efficiency in chip production. Another product, the Aether platform, helps chipmakers achieve higher performance and density. These are essential capabilities as demand for advanced AI chips increases.
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 in 2025. Additionally, the industry’s migration to backside power distribution and dry-resist processing presents growth opportunities for LRCX’s cutting-edge fabrication solutions.
These trends are aiding Lam Research’s financial performance. In the fourth quarter of fiscal 2025, the company reported revenues of $5.17 billion, up 34% year over year, and non-GAAP EPS of $1.33, highlighting a 64% increase.
The Case for Taiwan Semiconductor Stock
Taiwan Semiconductor continues to dominate the semiconductor foundry space. TSMC is known for its advanced production capabilities and has already moved into 3nm production, with 2nm coming soon. Its large scale allows it to handle rising AI chip demand better than most competitors. The company has established itself as the preferred manufacturing partner for AI accelerators, including graphics processing units (GPUs) and custom silicon developed by major players like NVIDIA, Marvell Technology and Broadcom.
The ongoing AI boom has placed TSMC at the center of a multi-year structural growth cycle. AI-related revenues tripled in 2024 and are expected to double again in 2025. Taiwan Semiconductor’s latest earnings report highlights just how dominant the company remains. In the second quarter of 2025, TSM’s revenues surged 44% year over year to $30.07 billion, while EPS jumped 61% to $2.47.
To keep up with the growing demand for AI chips, Taiwan Semiconductor is spending aggressively. The company is set to invest between $38 billion and $42 billion in capital expenditures in 2025, far outpacing its $29.8 billion investment in 2024.
Despite its strengths, Taiwan Semiconductor witnesses near-term hurdles. Escalating geopolitical tensions, particularly U.S.-China relations, pose strategic risks. With significant revenue exposure to China, Taiwan Semiconductor is vulnerable to export restrictions, supply-chain disruptions or further regulatory pressure. These uncertainties could weigh on near-term performance.
The company’s global expansion strategy adds further strain. New fabs in the United States (Arizona), Japan and Germany are vital for geopolitical risk mitigation, but they come with higher costs. These facilities are expected to drag down gross margins by 2-3 percentage points annually over the next three to five years due to higher labor and energy costs, along with lower utilization rates in the early stages.
LRCX vs. TSM: Earnings Growth Trend
The Zacks Consensus Estimate indicates that Lam Research has a stable earnings growth profile than Taiwan Semiconductor. The consensus mark for LRCX’s fiscal 2026 and 2027 earnings implies a year-over-year increase of 8.7% and 10.9%, respectively. On the other hand, TSM’s EPS is projected to slow down next year. For 2025 and 2026, the Zacks Consensus Estimate for TSM’s earnings indicates a year-over-year jump of 39.6% and 13.3%, respectively.
Moreover, the earnings estimate revision trend for the two companies reflects that analysts are turning more bullish toward LRCX.
LRCX Earnings Estimate Revision Trend
Image Source: Zacks Investment Research
TSM Earnings Estimate Revision Trend
Image Source: Zacks Investment Research
LRCX vs. TSM: Price Performance and Valuation
Year to date, shares of Lam Research and Taiwan Semiconductor have surged 94.3% and 49.5%, respectively.
Image Source: Zacks Investment Research
On the valuation front, Lam Research trades at 30.31 times forward earnings compared to 27.13 times for Taiwan Semiconductor. While LRCX looks more expensive, its positive earnings momentum justifies the premium. TSMC’s lower valuation reflects its risks, including higher capital spending and geopolitical concerns.
Image Source: Zacks Investment Research
Final Thoughts: LRCX Looks Like the Better Bet
Taiwan Semiconductor Manufacturing and Lam Research are both strong companies in an industry that should keep growing. However, today, Lam Research seems like the better investment. It is benefiting from the same AI trends as TSMC, but with fewer risks from political tensions and spending. Its steady growth, strong demand and solid profits make Lam Research a smarter choice for investors right now.
Image: Bigstock
LRCX vs. TSM: Which Semiconductor Stock Is the Better Bet Right Now?
Key Takeaways
Lam Research Corporation (LRCX - Free Report) and Taiwan Semiconductor Manufacturing Company (TSM - Free Report) are two powerhouses at the heart of the global semiconductor ecosystem. Taiwan Semiconductor, based in Taiwan and also known as TSMC, is the largest contract chipmaker globally. Meanwhile, Lam Research makes the equipment that chipmakers like TSMC use to produce those chips. Both companies are crucial to the tech supply chain and have seen strong demand in recent years.
Both companies are benefiting from the rise of AI, but their business models, risk profiles and long-term outlooks differ. Let’s break down how each company is performing and which one looks like the better investment right now.
The Case for Lam Research Stock
Lam Research is capitalizing on AI trends. It builds the tools chipmakers need to manufacture next-generation semiconductors, including high-bandwidth memory (HBM) and chips used in advanced packaging. These technologies are vital for powering AI and cloud data centers.
Lam Research’s products are not only critical but also innovative. For example, its ALTUS ALD tool uses molybdenum to improve speed and efficiency in chip production. Another product, the Aether platform, helps chipmakers achieve higher performance and density. These are essential capabilities as demand for advanced AI chips increases.
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 in 2025. Additionally, the industry’s migration to backside power distribution and dry-resist processing presents growth opportunities for LRCX’s cutting-edge fabrication solutions.
These trends are aiding Lam Research’s financial performance. In the fourth quarter of fiscal 2025, the company reported revenues of $5.17 billion, up 34% year over year, and non-GAAP EPS of $1.33, highlighting a 64% increase.
The Case for Taiwan Semiconductor Stock
Taiwan Semiconductor continues to dominate the semiconductor foundry space. TSMC is known for its advanced production capabilities and has already moved into 3nm production, with 2nm coming soon. Its large scale allows it to handle rising AI chip demand better than most competitors. The company has established itself as the preferred manufacturing partner for AI accelerators, including graphics processing units (GPUs) and custom silicon developed by major players like NVIDIA, Marvell Technology and Broadcom.
The ongoing AI boom has placed TSMC at the center of a multi-year structural growth cycle. AI-related revenues tripled in 2024 and are expected to double again in 2025. Taiwan Semiconductor’s latest earnings report highlights just how dominant the company remains. In the second quarter of 2025, TSM’s revenues surged 44% year over year to $30.07 billion, while EPS jumped 61% to $2.47.
To keep up with the growing demand for AI chips, Taiwan Semiconductor is spending aggressively. The company is set to invest between $38 billion and $42 billion in capital expenditures in 2025, far outpacing its $29.8 billion investment in 2024.
Despite its strengths, Taiwan Semiconductor witnesses near-term hurdles. Escalating geopolitical tensions, particularly U.S.-China relations, pose strategic risks. With significant revenue exposure to China, Taiwan Semiconductor is vulnerable to export restrictions, supply-chain disruptions or further regulatory pressure. These uncertainties could weigh on near-term performance.
The company’s global expansion strategy adds further strain. New fabs in the United States (Arizona), Japan and Germany are vital for geopolitical risk mitigation, but they come with higher costs. These facilities are expected to drag down gross margins by 2-3 percentage points annually over the next three to five years due to higher labor and energy costs, along with lower utilization rates in the early stages.
LRCX vs. TSM: Earnings Growth Trend
The Zacks Consensus Estimate indicates that Lam Research has a stable earnings growth profile than Taiwan Semiconductor. The consensus mark for LRCX’s fiscal 2026 and 2027 earnings implies a year-over-year increase of 8.7% and 10.9%, respectively. On the other hand, TSM’s EPS is projected to slow down next year. For 2025 and 2026, the Zacks Consensus Estimate for TSM’s earnings indicates a year-over-year jump of 39.6% and 13.3%, respectively.
Moreover, the earnings estimate revision trend for the two companies reflects that analysts are turning more bullish toward LRCX.
LRCX Earnings Estimate Revision Trend
Image Source: Zacks Investment Research
TSM Earnings Estimate Revision Trend
Image Source: Zacks Investment Research
LRCX vs. TSM: Price Performance and Valuation
Year to date, shares of Lam Research and Taiwan Semiconductor have surged 94.3% and 49.5%, respectively.
Image Source: Zacks Investment Research
On the valuation front, Lam Research trades at 30.31 times forward earnings compared to 27.13 times for Taiwan Semiconductor. While LRCX looks more expensive, its positive earnings momentum justifies the premium. TSMC’s lower valuation reflects its risks, including higher capital spending and geopolitical concerns.
Image Source: Zacks Investment Research
Final Thoughts: LRCX Looks Like the Better Bet
Taiwan Semiconductor Manufacturing and Lam Research are both strong companies in an industry that should keep growing. However, today, Lam Research seems like the better investment. It is benefiting from the same AI trends as TSMC, but with fewer risks from political tensions and spending. Its steady growth, strong demand and solid profits make Lam Research a smarter choice for investors right now.
Currently, Lam Research has a Zacks Rank #2 (Buy), making the stock a must-pick compared to Taiwan Semiconductor Manufacturing, which has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.