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LRCX vs. TSM: Which Semiconductor Powerhouse Is the Better Buy?
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Key Takeaways
LRCX is riding on the AI-driven demand for advanced packaging and memory tools used in next-gen chips.
LRCX posted Q1 fiscal 2026 revenues of $5.32B, up 28% year over year, with EPS climbing 46.5%.
TSM faces margin pressure from rising capex and higher costs tied to fabs in the U.S., Japan and Germany.
Lam Research Corporation (LRCX - Free Report) and Taiwan Semiconductor Manufacturing Company (TSM - Free Report) are two of the critical players in the global semiconductor supply chain. 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 essential to the production of high-performance computing and artificial intelligence (AI) chips. However, from an investment perspective, one stock currently offers a more favorable outlook than the other. 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 continues to increase.
In 2024, Lam Research’s shipments for gate-all-around nodes and advanced packaging exceeded $1 billion, and management had expected 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. The company has demonstrated consistent execution, maintaining quarterly revenues of more than $5 billion for the past two consecutive quarters, reflecting solid demand from leading chipmakers such as Taiwan Semiconductor and Samsung.
Lam Research’s strength lies in its leadership in etch and deposition equipment, which are essential for high-performance computing and AI chip production. In the first quarter of fiscal 2026, the company reported revenues of $5.32 billion, up 28% year over year, and non-GAAP earnings per share (EPS) of $1.26, representing a 46.5% rise.
The Case for Taiwan Semiconductor Stock
Taiwan Semiconductor continues to lead the global chip foundry market. Its scale and technology make it the first choice for companies driving the AI boom. NVIDIA, Marvell and Broadcom all count on TSMC to build advanced graphics processing units (GPUs) and AI accelerators. TSM’s latest earnings report highlights just how dominant the company remains. In the third quarter of 2025, Taiwan Semiconductor’s revenues surged 41% year over year to $33.1 billion, while EPS jumped 39% to $2.92.
AI-related chip sales have become a major driver. Though the actual figures will be known from the company’s upcoming fourth-quarter 2025 results, the contribution of AI-related chip sales is anticipated to reach approximately 30% of total revenues in 2025, up from mid-teens percentage in 2024. Management had also previously expected that AI revenues would grow 40% annually over the next five years. That makes TSMC central to the AI supply chain.
To keep up with the growing demand for AI chips, Taiwan Semiconductor is spending aggressively. The company had previously projected to invest between $40 billion and $42 billion in capital expenditures in 2025, far outpacing its $29.8 billion investment in 2024. The bulk of this spending, approximately 70%, is focused on advanced manufacturing processes, ensuring TSMC remains ahead of other chip manufacturing rivals.
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, TSMC 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 more 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 15.7% and 15.5%, respectively. On the other hand, TSM’s EPS is projected to slow down in 2026. For 2025 and 2026, the Zacks Consensus Estimate for TSMC’s earnings indicates a year-over-year jump of 44.5% and 20%, 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
Over the past year, shares of Lam Research and Taiwan Semiconductor have surged 163.2% and 54.2%, respectively.
Image Source: Zacks Investment Research
On the valuation front, Lam Research trades at 39.19 times forward earnings compared to 26.02 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
Conclusion: LRCX Stock Looks Like the Better Buy
Taiwan Semiconductor and Lam Research are both strong companies in an industry that should keep growing. However, today, LRCX 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 Powerhouse Is the Better Buy?
Key Takeaways
Lam Research Corporation (LRCX - Free Report) and Taiwan Semiconductor Manufacturing Company (TSM - Free Report) are two of the critical players in the global semiconductor supply chain. 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 essential to the production of high-performance computing and artificial intelligence (AI) chips. However, from an investment perspective, one stock currently offers a more favorable outlook than the other. 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 continues to increase.
In 2024, Lam Research’s shipments for gate-all-around nodes and advanced packaging exceeded $1 billion, and management had expected 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. The company has demonstrated consistent execution, maintaining quarterly revenues of more than $5 billion for the past two consecutive quarters, reflecting solid demand from leading chipmakers such as Taiwan Semiconductor and Samsung.
Lam Research’s strength lies in its leadership in etch and deposition equipment, which are essential for high-performance computing and AI chip production. In the first quarter of fiscal 2026, the company reported revenues of $5.32 billion, up 28% year over year, and non-GAAP earnings per share (EPS) of $1.26, representing a 46.5% rise.
The Case for Taiwan Semiconductor Stock
Taiwan Semiconductor continues to lead the global chip foundry market. Its scale and technology make it the first choice for companies driving the AI boom. NVIDIA, Marvell and Broadcom all count on TSMC to build advanced graphics processing units (GPUs) and AI accelerators. TSM’s latest earnings report highlights just how dominant the company remains. In the third quarter of 2025, Taiwan Semiconductor’s revenues surged 41% year over year to $33.1 billion, while EPS jumped 39% to $2.92.
AI-related chip sales have become a major driver. Though the actual figures will be known from the company’s upcoming fourth-quarter 2025 results, the contribution of AI-related chip sales is anticipated to reach approximately 30% of total revenues in 2025, up from mid-teens percentage in 2024. Management had also previously expected that AI revenues would grow 40% annually over the next five years. That makes TSMC central to the AI supply chain.
To keep up with the growing demand for AI chips, Taiwan Semiconductor is spending aggressively. The company had previously projected to invest between $40 billion and $42 billion in capital expenditures in 2025, far outpacing its $29.8 billion investment in 2024. The bulk of this spending, approximately 70%, is focused on advanced manufacturing processes, ensuring TSMC remains ahead of other chip manufacturing rivals.
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, TSMC 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 more 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 15.7% and 15.5%, respectively. On the other hand, TSM’s EPS is projected to slow down in 2026. For 2025 and 2026, the Zacks Consensus Estimate for TSMC’s earnings indicates a year-over-year jump of 44.5% and 20%, 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
Over the past year, shares of Lam Research and Taiwan Semiconductor have surged 163.2% and 54.2%, respectively.
Image Source: Zacks Investment Research
On the valuation front, Lam Research trades at 39.19 times forward earnings compared to 26.02 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
Conclusion: LRCX Stock Looks Like the Better Buy
Taiwan Semiconductor and Lam Research are both strong companies in an industry that should keep growing. However, today, LRCX 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, which has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.