11. Lam Research Corporation (NASDAQ:LRCX)
Number of Hedge Fund Shareholders In Q1 2024: 78
Lam Research Corporation (NASDAQ:LRCX) is a backend AI hardware stock as it makes and sells machines used in semiconductor fabrication. Like other AI stocks, it has held its ground on the financial front by having beaten adjusted analyst EPS estimates in all four of its latest quarters. Adding to the AI and chip boom, Raymond James increased Lam Research Corporation (NASDAQ:LRCX)’s share price target to $1,060 from $950 in June 2024, as it shared that AI demand, robust data center growth in H2 2024, and government subsidies like those promised by the CHIPS and Science Act should prove to be tailwinds to the stock.
As of March 2024, 78 hedge funds part of Insider Monkey’s database had bought a stake in Lam Research Corporation (NASDAQ:LRCX). Rajiv Jain’s GQG Partners owned the most valuable stake which was worth $2 billion.
Lam Research Corporation (NASDAQ:LRCX) is one of the more controversial AI stocks since it is caught in the middle of tensions between US and China. The US has sanctioned China from buying advanced chip equipment due to national security concerns, but despite this, Lam Research Corporation (NASDAQ:LRCX)’s first quarter earnings report saw the firm earn $3.76 billion in revenue from China. Baron Funds’ Q4 2023 investor letter was also quite optimistic for Lam Research Corporation (NASDAQ:LRCX) as it shared:
Lam Research Corporation is a leading global supplier of wafer fabrication equipment (WFE) and services to the semiconductor industry. Lam’s products tend to focus on etch and deposition process steps and its tools are critical in the production of NAND and DRAM memory chips as well as logic devices. While the share of overall WFE spending looks relatively fragmented across the top four to five players in the industry, each of these leading companies tends to have significant share within smaller slices of the industry, creating a stable and favorable industry structure, with share shifts tending to only happen at times of technology transition in the broader industry. We purchased shares of Lam in the quarter as we believe we are at one of those key transition points in the industry that will disproportionately benefit Lam, with a move to gate-all-around transistors in logic creating an increasing need for complex deposition and etch process stops and the emergence of high-bandwidth memory and advanced packaging requiring increasingly complex high-aspect-ratio (i.e., very deep) etches, where Lam has virtually 100% market share. We also believe the market is underestimating the pent-up earnings power in the company as NAND WFE spending recovers in the coming years from one of its worst downcycles ever in 2023.
