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AMAT vs. LRCX: Which WFE Stock is a Safer Bet Right Now?
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Key Takeaways
Applied Materials sees leading-edge WFE verticals driving about 80% of growth in 2026 and 2027.
Lam Research expects NAND revenue gains as customers convert capacity to 256-layer and above devices.
Applied Materials trades at a lower forward P/S multiple, while Lam Research faces China-related trade risks.
Applied Materials (AMAT - Free Report) and Lam Research (LRCX - Free Report) are two important players in the wafer fabrication equipment (WFE) market. Applied Materials serves a broad portfolio of logic, DRAM, HBM, NAND, advanced packaging, display and semiconductor services, while Lam Research focuses on foundry, DRAM, NAND and NVM, with a concentration on etching and deposition.
As the artificial intelligence (AI) boom continues to drive growth in the semiconductor industry, the question remains: Which stock is the better investment pick today? Let’s break down their fundamentals, growth prospects, market challenges and valuation to determine which offers a more compelling investment case.
The Case for AMAT Stock
Applied Materials is benefiting from AI-driven investment that is concentrating wafer fabrication spending in leading-edge foundry-logic, DRAM and advanced packaging, where its materials engineering portfolio has broad exposure. New process tools, rising advanced packaging demand and a larger connected service base support continued share capture and value-based pricing.
As AI infrastructure investment is concentrating the WFE demand in leading-edge foundry-logic, DRAM and advanced packaging, AMAT expects these verticals to represent around 80% of WFE growth in 2026 and 2027. AMAT’s third-quarter fiscal 2026 Semiconductor Systems revenues rose 27% year over year, and fourth-quarter fiscal 2026 semiconductor systems revenues are guided to about $7.9 billion, up 62% year over year.
The demand for DRAM and high-bandwidth memory is also on the rise as AMAT experiences its leading-edge DRAM fabs running at full capacity. In the third quarter of fiscal 2026, DRAM revenues rose 52% year over year to a record level. Applied Materials followed this with the launch of Centura Prime epitaxy and Producer Avila 2 PECVD to improve DRAM performance and enable higher-layer-count HBM.
AMAT is extending its portfolio across HBM and 3D chiplet stacking with Nokota VMax 2 plating, Opta Quad CMP and two new eBeam systems for metrology and defect analysis and a broad next-generation portfolio for larger panel formats across digital lithography, deposition, etch and eBeam is under review. Applied Materials now expects advanced packaging revenues to grow more than 70% in 2026.
AMAT’s Applied Global Services is growing alongside fab utilization with third-quarter fiscal 2026 revenues reaching a record $1.78 billion, up 22% year over year. These factors are enabling AMAT to rapidly expand both revenues and earnings. For the fourth quarter of fiscal 2026, Applied Materials expects non-GAAP earnings of $4.02 per share (+/- 20 cents). The Zacks Consensus Estimate is pegged at $4.05 per share, with the estimates being revised upward in the past 30 days.
Lam Research is growing on the back of AI-driven investment in memory, leading-edge foundry and advanced packaging. Rising process complexity is increasing demand for etch and deposition tools, while NAND conversions, advanced DRAM and larger packages serve as a tailwind for LRCX.
As AI is increasing storage and bandwidth requirements, Lam Research raised its calendar year 2026 WFE outlook and expects 2027 to offer an extraordinary setup for further growth. NAND revenues more than doubled sequentially in the recent quarter as customers converted capacity to 256-layer and above-class devices. LRCX expects its NAND SAM per wafer to double from the 128-layer node to 500-plus layers, expanding the opportunity.
Lam Research is extending production-proven foundry and logic capabilities into advanced DRAM as customers adopt smaller pitches and more complex wiring. Akara has secured strategic tool-of-record positions for difficult gate etch applications, and its installed base has doubled annually since launch. Furthermore, gate-all-around, CFET, HBM, 4F-squared architectures and panel-level packaging are increasing deposition and etch intensity.
However, trade restrictions and export controls remain a material risk because China accounted for 26% of June-quarter revenues, despite falling from 34% in March. Since Lam Research generates most of its revenues outside the United States, with Taiwan, China and Korea accounting for 73% of fourth quarter fiscal 2026 revenues, this poses a risk for the company.
For the first quarter of fiscal 2027, Lam Research projects revenues of $8.10 billion (+/-$400 million). Non-GAAP earnings are expected to be $2.15 per share (+/- 15 cents), indicating year-over-year growth of 71%. Estimates have remained unchanged for the past 30 days.
Image Source: Zacks Investment Research
Stock Price Performance and Valuation of AMAT and LRCX
Year to date, shares of Applied Materials and LRCX have gained 63.9% and 58.5%, respectively.
YTD Performance Chart
Image Source: Zacks Investment Research
AMAT and LRCX are trading at forward 12-month price-to-sales multiples of 7.55X and 9.48X, below their one-year medians of 8.55X and 11.25X, respectively.
Forward 12-Month (P/S) Valuation Chart
Image Source: Zacks Investment Research
Conclusion: AMAT vs. LRCX
Both AMAT and LRCX are essential players in the semiconductor equipment space, but AMAT’s broader portfolio makes it a safer pick right now, as it is not banking on fewer technologies. AMAT and LRCX carry Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
View the Zacks #1 Rank List
Image: Bigstock
AMAT vs. LRCX: Which WFE Stock is a Safer Bet Right Now?
Key Takeaways
Applied Materials (AMAT - Free Report) and Lam Research (LRCX - Free Report) are two important players in the wafer fabrication equipment (WFE) market. Applied Materials serves a broad portfolio of logic, DRAM, HBM, NAND, advanced packaging, display and semiconductor services, while Lam Research focuses on foundry, DRAM, NAND and NVM, with a concentration on etching and deposition.
As the artificial intelligence (AI) boom continues to drive growth in the semiconductor industry, the question remains: Which stock is the better investment pick today? Let’s break down their fundamentals, growth prospects, market challenges and valuation to determine which offers a more compelling investment case.
The Case for AMAT Stock
Applied Materials is benefiting from AI-driven investment that is concentrating wafer fabrication spending in leading-edge foundry-logic, DRAM and advanced packaging, where its materials engineering portfolio has broad exposure. New process tools, rising advanced packaging demand and a larger connected service base support continued share capture and value-based pricing.
As AI infrastructure investment is concentrating the WFE demand in leading-edge foundry-logic, DRAM and advanced packaging, AMAT expects these verticals to represent around 80% of WFE growth in 2026 and 2027. AMAT’s third-quarter fiscal 2026 Semiconductor Systems revenues rose 27% year over year, and fourth-quarter fiscal 2026 semiconductor systems revenues are guided to about $7.9 billion, up 62% year over year.
The demand for DRAM and high-bandwidth memory is also on the rise as AMAT experiences its leading-edge DRAM fabs running at full capacity. In the third quarter of fiscal 2026, DRAM revenues rose 52% year over year to a record level. Applied Materials followed this with the launch of Centura Prime epitaxy and Producer Avila 2 PECVD to improve DRAM performance and enable higher-layer-count HBM.
AMAT is extending its portfolio across HBM and 3D chiplet stacking with Nokota VMax 2 plating, Opta Quad CMP and two new eBeam systems for metrology and defect analysis and a broad next-generation portfolio for larger panel formats across digital lithography, deposition, etch and eBeam is under review. Applied Materials now expects advanced packaging revenues to grow more than 70% in 2026.
AMAT’s Applied Global Services is growing alongside fab utilization with third-quarter fiscal 2026 revenues reaching a record $1.78 billion, up 22% year over year. These factors are enabling AMAT to rapidly expand both revenues and earnings. For the fourth quarter of fiscal 2026, Applied Materials expects non-GAAP earnings of $4.02 per share (+/- 20 cents). The Zacks Consensus Estimate is pegged at $4.05 per share, with the estimates being revised upward in the past 30 days.
Image Source: Zacks Investment Research
The Case for LRCX Stock
Lam Research is growing on the back of AI-driven investment in memory, leading-edge foundry and advanced packaging. Rising process complexity is increasing demand for etch and deposition tools, while NAND conversions, advanced DRAM and larger packages serve as a tailwind for LRCX.
As AI is increasing storage and bandwidth requirements, Lam Research raised its calendar year 2026 WFE outlook and expects 2027 to offer an extraordinary setup for further growth. NAND revenues more than doubled sequentially in the recent quarter as customers converted capacity to 256-layer and above-class devices. LRCX expects its NAND SAM per wafer to double from the 128-layer node to 500-plus layers, expanding the opportunity.
Lam Research is extending production-proven foundry and logic capabilities into advanced DRAM as customers adopt smaller pitches and more complex wiring. Akara has secured strategic tool-of-record positions for difficult gate etch applications, and its installed base has doubled annually since launch. Furthermore, gate-all-around, CFET, HBM, 4F-squared architectures and panel-level packaging are increasing deposition and etch intensity.
However, trade restrictions and export controls remain a material risk because China accounted for 26% of June-quarter revenues, despite falling from 34% in March. Since Lam Research generates most of its revenues outside the United States, with Taiwan, China and Korea accounting for 73% of fourth quarter fiscal 2026 revenues, this poses a risk for the company.
For the first quarter of fiscal 2027, Lam Research projects revenues of $8.10 billion (+/-$400 million). Non-GAAP earnings are expected to be $2.15 per share (+/- 15 cents), indicating year-over-year growth of 71%. Estimates have remained unchanged for the past 30 days.
Image Source: Zacks Investment Research
Stock Price Performance and Valuation of AMAT and LRCX
Year to date, shares of Applied Materials and LRCX have gained 63.9% and 58.5%, respectively.
YTD Performance Chart
Image Source: Zacks Investment Research
AMAT and LRCX are trading at forward 12-month price-to-sales multiples of 7.55X and 9.48X, below their one-year medians of 8.55X and 11.25X, respectively.
Forward 12-Month (P/S) Valuation Chart
Image Source: Zacks Investment Research
Conclusion: AMAT vs. LRCX
Both AMAT and LRCX are essential players in the semiconductor equipment space, but AMAT’s broader portfolio makes it a safer pick right now, as it is not banking on fewer technologies. AMAT and LRCX carry Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.