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Fremont, California-based Lam Research Corporation (LRCX) is a global supplier of innovative wafer fabrication equipment and services to the semiconductor industry. With a market cap of $100.7 billion, Lam operates as a fundamental enabler of the fourth industrial revolution and a trusted partner to the world’s leading semiconductor companies.
Companies worth $10 billion or more are generally described as "large-cap stocks," Lam Research fits this bill perfectly. Given the company’s widespread operations across the U.S., Indo-Pacific and EMEA, its valuation above this mark is not surprising. Lam focuses on designing and manufacturing semiconductor processing equipment used in the fabrication of integrated circuits and pushes the boundaries of technical limitations.
Despite its strengths, LRCX has declined 33.4% from its all-time high of $113.00 achieved on Jul. 11. The stock has observed a marginal decline over the past three months underperforming the iShares Semiconductor ETF’s (SOXX) 2.6% gains during the same time frame.
Over the longer term, Lam’s performance looks even more grim as the stock dipped around 4% on a YTD basis and gained 7.9% over the past 52 weeks compared to SOXX’s 13.8% gains in 2024 and 29.2% returns over the past year.
To confirm the recent downturn, LRCX has traded below its 200-day moving average since the start of August and below its 50-day moving average since mid-July with some fluctuations.
However, Lam Research’s stock prices surged 5.1% in the trading session after the release of its impressive Q1 results on Oct. 23. The company observed a notable growth in systems revenue as a result of strengthened investments in the dynamic random-access memory (“DRAM”) market segment and increases in customer support-related revenue, which led to a staggering 19.7% year-over-year growth in revenues, reaching $4.2 billion. Despite the increase in incentive compensation and outside services expenses, the company’s focus on improving factory efficiencies resulted in a notable 6.2% year-over-year growth in adjusted EPS to $0.86, which surpassed analysts’ estimates by 7.5%.
Furthermore, the company expects this momentum to continue into the subsequent quarters and its Q2 guidance suggests an approximate 14% year-over-year revenue growth to $4.3 billion.
Lam Research has lagged behind its peer KLA Corporation’s (KLAC) 10.6% gains on a YTD basis and 19.6% returns over the past year.
Nevertheless, the stock has a consensus “Moderate Buy” rating among the 28 analysts covering it. The mean price target of $93.85 suggests a staggering 24.8% upside potential from current price levels.
