We recently published a list of 10 Best Semiconductor Stocks to Buy According to Billionaires. In this article, we are going to take a look at where Lam Research Corp. (NASDAQ:LRCX) stands against other best semiconductor stocks to buy according to billionaires.
The global semiconductor market is poised for substantial growth, with research firm MarketsandMarkets estimating its value to reach $628 billion in 2024 and expand to $707 billion by 2025, reflecting a robust 12.5% growth rate. The firm, in their Global Semiconductor Industry Outlook 2025 report, also highlights that this surge is driven by increasing demand for semiconductors in data centers, high-performance computing (HPC), and artificial intelligence (AI) applications. As AI adoption accelerates, semiconductors are cementing their role as the foundation of next-generation digital infrastructure. The rising needs of hyperscalers and cloud service providers, particularly in handling AI workloads, are expected to further drive semiconductor industry expansion.
Further, MarketsandMarkets notes that the key growth drivers for the semiconductor sector in 2025 include high-bandwidth memory (HBM) that is crucial for AI accelerators and GPUs, AI servers that power deep learning and real-time analytics, and Gen-AI smartphones featuring advanced AI-integrated chips. However, the industry faces notable challenges as well, including supply chain disruptions and evolving regulatory frameworks that impact production costs, market access, and overall growth.
The cyclical nature of the semiconductor industry and ongoing uncertainties, such as tariffs and trade policies, have been major discussion points among investors. Jordan Klein, Managing Director at Mizuho Securities, had addressed the industry’s demand outlook in a CNBC interview, emphasizing that semiconductor stocks often anticipate market fundamentals six months in advance. While AI-driven companies like NVIDIA are experiencing strong demand, other segments, such as memory, PCs, and industrial chips, are not delivering significant earnings surprises. Meanwhile, investors are increasingly favoring sectors like software and fintech over semiconductors. Klein also raised concerns about a potential slowdown in 2025, suggesting that many investors are currently adopting a “wait and see” approach rather than buying in expectation of near-term improvements. While AI-driven semiconductor companies are likely to maintain momentum, weaker segments may struggle to recover in the short term.
So far, Klein’s take seems to be playing out. The S&P Semiconductors Industry Index is down nearly 13% in 2025, significantly lagging the broader S&P 500, which has fallen about 3.5%. But there’s a silver lining—historically, when semiconductor companies start cutting earnings estimates, their stock prices tend to rebound because those cuts are often already priced in. This could create buying opportunities for long-term investors.
Despite short-term headwinds, the long-term outlook for semiconductors remains strong. AI, cloud computing, and HPC will continue to push demand for advanced chips, and while cyclical downturns and regulatory challenges may create volatility, they also open the door for investors to buy quality semiconductor stocks at lower valuations. Keeping an eye on earnings revisions and broader market trends could help investors find solid entry points in this ever-evolving industry.
Our Methodology
For this list, we first compiled a preliminary list of Semiconductors and Semiconductor Equipment & Materials stocks using a review of online screeners, ETFs and financial media reports. We then analysed Insider Monkey’s database of billionaire holdings to determine the most favoured semiconductor stocks among those investors. We then ranked top 10 of these stocks in ascending order based on the number of billionaire investors holding positions in each company as of Q4 2024. Additionally, we also provide data to assess hedge fund sentiment surrounding these stocks, utilizing data from Insider Monkey’s Q4 2024 hedge fund database to provide deeper insights into institutional investor trends.
Note: All pricing data is as of market close on March 20.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A technician operating an automated semiconductor processing machine with laser accuracy.
Lam Research Corp. (NASDAQ:LRCX)
Number of Billionaire Investors: 20
Billionaire Holdings: $3.5 Billion
Number of Hedge Fund Holders: 84
Lam Research Corp. (NASDAQ:LRCX) is a leading semiconductor equipment manufacturer that provides wafer fabrication equipment and services to the semiconductor industry. The company’s innovative systems for wafer etching and deposition are essential for the advanced nodes of semiconductor technology, enabling the creation of smaller and more efficient integrated circuits.
Lam Research Corp. (NASDAQ:LRCX) is poised to benefit from rising demand for high-performance computing and AI applications. The company’s investments in advanced technologies like Gate-All-Around transistors and EUV patterning give it a competitive edge. Additionally, its per-bit cost reduction efforts enhance memory efficiency, thus positioning it for growth in the expanding semiconductor market.
In mid-February, Needham analyst Charles Shi reaffirmed his bullish outlook on Lam Research Corp. (NASDAQ:LRCX), maintaining a Buy rating with a price target of $96. His optimism stems from the company’s recently announced long-term financial targets for 2028 and 2030, which were presented at the 2025 Investor Day. While acknowledging potential risks, the analyst believes that the company is well-positioned to achieve its goals, even if upside potential remains somewhat constrained. A key highlight of the company’s strategy is its ambitious gross margin target of 50%, which he viewed positively. Additionally, the company’s disciplined approach to operational expenditures and conservative share buyback strategy are expected to drive earnings growth.
Overall, LRCX ranks 4th on our list of best semiconductor stocks to buy according to billionaires. While we acknowledge the potential of LRCX to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than LRCX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires
Disclosure: None. This article is originally published at Insider Monkey.
