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.
Can Advanced Packaging Demand Accelerate LRCX's Long-Term Growth?
Read MoreHide Full Article
Key Takeaways
LRCX expects advanced packaging revenues to grow more than 40% in fiscal 2026.
LRCX benefits from HBM4 demand, with up to 16-layer stacking driving electroplating and TSV etch needs.
LRCX sees Advanced packaging is becoming a larger spending area in memory, foundry and logic.
Lam Research (LRCX - Free Report) is witnessing strong growth in its advanced packaging business, which is being driven by the need to build more complex chips on the back of strong AI demand. As chipmakers look to improve performance and memory bandwidth, advanced packaging is becoming an important area in both memory and logic production. This demand is driving LRCX's advanced packaging business to play a key role in the company's growth story.
Lam Research expects its advanced packaging business to grow more than 40% in fiscal 2026, which is faster than its expected growth in wafer fab equipment spending for this area. A major reason is the shift to newer memory products like HBM4 and HBM4E, which need more advanced packaging and stacking of up to 16 layers. This bodes well for LRCX's prospects as the company has leadership in electroplating and TSV etch, both of which are important steps in advanced packaging.
This opportunity is not limited to memory. Advanced packaging is becoming more important in foundry and logic, where chipmakers are using more complex package designs to improve performance and add more functions. Management had earlier estimated advanced packaging to be a mid-single-digit percentage of foundry/logic equipment spending, but now expects that number to move higher. This shows that advanced packaging is becoming a larger spending area across the semiconductor industry.
The above-mentioned factors show that advanced packaging is becoming a major growth driver for LRCX. As AI systems require more memory, faster data movement and tighter chip integration, spending on advanced packaging is likely to keep rising. If this trend continues, it can support Lam Research’s overall growth over the next few years. The Zacks Consensus Estimate for fiscal 2026 and 2027 revenues indicates a year-over-year increase of around 21% and 22.1%, respectively.
How Competitors Fare Against LRCX
AMAT competes with companies like Applied Materials (AMAT - Free Report) and ASML Holdings (ASML - Free Report) in the semiconductor equipment market.
Applied Materials recently expanded its partnership with Micron to build better memory chips for AI. Here, the goal is to develop next-generation DRAM, high-bandwidth memory and NAND solutions to increase speed and performance while reducing power use. The work will be done at AMAT’s EPIC Center in Silicon Valley and Micron’s R&D center in Boise, ID. Teams from both companies will work together to speed up development and move ideas into production faster.
ASML is witnessing strong demand from DRAM and logic customers, which are ramping leading-edge nodes using ASML’s NXE:3800E EUV systems. ASML noted that multiple DRAM customers are adopting EUV lithography, which helps in shortening cycle time and lowering costs.
LRCX’s Share Price Performance, Valuation and Estimates
Shares of Lam Research have surged 62.7% over the past six months compared with the Zacks Electronics – Semiconductors industry’s return of 10.2%.
LRCX 6-Month Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, Lam Research trades at a forward price-to-sales ratio of 10.21, significantly higher than the industry’s average of 7.5.
Lam Research Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Lam Research’s fiscal 2026 and 2027 earnings implies a year-over-year increase of approximately 26.6% and 27%, respectively. Estimates for fiscal 2026 and 2027 have been revised upward over the past 60 and 30 days, respectively.
View the Zacks #1 Rank List
Image: Bigstock
Can Advanced Packaging Demand Accelerate LRCX's Long-Term Growth?
Key Takeaways
Lam Research (LRCX - Free Report) is witnessing strong growth in its advanced packaging business, which is being driven by the need to build more complex chips on the back of strong AI demand. As chipmakers look to improve performance and memory bandwidth, advanced packaging is becoming an important area in both memory and logic production. This demand is driving LRCX's advanced packaging business to play a key role in the company's growth story.
Lam Research expects its advanced packaging business to grow more than 40% in fiscal 2026, which is faster than its expected growth in wafer fab equipment spending for this area. A major reason is the shift to newer memory products like HBM4 and HBM4E, which need more advanced packaging and stacking of up to 16 layers. This bodes well for LRCX's prospects as the company has leadership in electroplating and TSV etch, both of which are important steps in advanced packaging.
This opportunity is not limited to memory. Advanced packaging is becoming more important in foundry and logic, where chipmakers are using more complex package designs to improve performance and add more functions. Management had earlier estimated advanced packaging to be a mid-single-digit percentage of foundry/logic equipment spending, but now expects that number to move higher. This shows that advanced packaging is becoming a larger spending area across the semiconductor industry.
The above-mentioned factors show that advanced packaging is becoming a major growth driver for LRCX. As AI systems require more memory, faster data movement and tighter chip integration, spending on advanced packaging is likely to keep rising. If this trend continues, it can support Lam Research’s overall growth over the next few years. The Zacks Consensus Estimate for fiscal 2026 and 2027 revenues indicates a year-over-year increase of around 21% and 22.1%, respectively.
How Competitors Fare Against LRCX
AMAT competes with companies like Applied Materials (AMAT - Free Report) and ASML Holdings (ASML - Free Report) in the semiconductor equipment market.
Applied Materials recently expanded its partnership with Micron to build better memory chips for AI. Here, the goal is to develop next-generation DRAM, high-bandwidth memory and NAND solutions to increase speed and performance while reducing power use. The work will be done at AMAT’s EPIC Center in Silicon Valley and Micron’s R&D center in Boise, ID. Teams from both companies will work together to speed up development and move ideas into production faster.
ASML is witnessing strong demand from DRAM and logic customers, which are ramping leading-edge nodes using ASML’s NXE:3800E EUV systems. ASML noted that multiple DRAM customers are adopting EUV lithography, which helps in shortening cycle time and lowering costs.
LRCX’s Share Price Performance, Valuation and Estimates
Shares of Lam Research have surged 62.7% over the past six months compared with the Zacks Electronics – Semiconductors industry’s return of 10.2%.
LRCX 6-Month Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, Lam Research trades at a forward price-to-sales ratio of 10.21, significantly higher than the industry’s average of 7.5.
Lam Research Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Lam Research’s fiscal 2026 and 2027 earnings implies a year-over-year increase of approximately 26.6% and 27%, respectively. Estimates for fiscal 2026 and 2027 have been revised upward over the past 60 and 30 days, respectively.
Image Source: Zacks Investment Research
Lam Research currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.