8 Cheap Growth Stocks to Buy According to Analysts

5. Lam Research Corporation (NASDAQ:LRCX)

Forward P/E Ratio: 21.9

Earnings Growth This Year: 18.20%  

Analyst Upside Potential: 29.13% 

Lam Research Corporation (NASDAQ:LRCX) is a technology company that develops essential equipment and services required for making semiconductors, which are the powerhouse for artificial intelligence these days.

The strategic edge of the company originates from the rapid adoption of artificial intelligence. It has been witnessing increased demand for high-bandwidth memory (HBM) technology. The HBM technology enables data centers to track high amounts of data while keeping energy consumption low.

All major technology companies that are working on AI or data centers are expected to need more HBM technologies to keep their operations running. According to a forecast the demand for HBM is expected to increase from 478 million GB in 2023 to more than 1,700 GB by 2025.

Lam Research Corporation (NASDAQ:LRCX) generated around 36% of its total revenue from the sale of memory-related technology, indicating its close relation with the industry and prospects of growth associated with it.

The fiscal fourth-quarter revenue was ahead of analyst expectations, the company generated $3.87 billion while the expectations were $3.82 billion. The revenues went up 21% year-over-year, and earnings per share also bested analysts at $8.14.

Lam Research Corporation (NASDAQ:LRCX) is one of the cheap growth stocks to buy according to analysts. 33 analysts have a consensus Buy rating on the stock, with their 12-month median price target of  $1,021.50, presenting a 29.13% upside from current levels.

Artisan Select Equity Fund stated the following regarding Lam Research Corporation (NASDAQ:LRCX) in its Q2 2024 investor letter:

“The top contributors to performance for the quarter were Alphabet, Lam Research Corporation (NASDAQ:LRCX) and Elevance. Lam Research shares rose 10% during the quarter and are up 67% over the past year, primarily due to optimism around the pending investment cycle in semiconductor capital expenditures. Lam is one of the largest equipment manufacturers used to make semiconductor chips. This equipment, commonly referred to as WFE (wafer fabrication equipment), is expected to experience significant growth due to a combination of a cyclical rebound in memory chips and growing demand for new AI-related chips. Lam’s product portfolio is particularly well positioned to benefit from both trends and should grow even faster than the overall market. Its shares now trade at ~30X prior peak earnings, which suggests this dynamic is well understood by the market and is mostly priced in.”