3. Lam Research Corporation (NASDAQ:LRCX)
Number of Hedge Fund Investors: 84
Jim Cramer highlights Lam Research Corporation (NASDAQ:LRCX) as a leading semiconductor capital equipment manufacturer. He notes that Lam Research Corporation (NASDAQ:LRCX)’s current performance is being hindered by a decline in Chinese orders and Intel’s reduced manufacturing plans in Europe. Despite these challenges, Cramer believes Lam Research Corporation (NASDAQ:LRCX) is a strong investment opportunity. However, he suggests waiting for the stock price to decline further, given the broader industry issues.
“Lam Research is a key semiconductor capital equipment maker. Right now, they’re being suppressed by a lack of Chinese orders, not to mention Intel slowing its European manufacturing plans, in order to preserve its balance sheet. If not for those issues, I think it’d be a great buy right now. But given that the industry has problems, I say let it come in even more. However, Lam is the best in the group.”
Lam Research Corporation (NASDAQ:LRCX) has a strong outlook driven by high demand for semiconductor manufacturing, largely due to the growing need for chips in automotive, AI, consumer electronics, and the expansion of 5G networks and IoT devices. In Q2 2024, Lam Research Corporation (NASDAQ:LRCX) reported about $3.8 billion in revenue, showing year-over-year growth supported by strong orders and increased shipments of etch and deposition equipment, alongside impressive gross margins indicating effective operations.
Lam Research Corporation (NASDAQ:LRCX) stays at the forefront of technology with ongoing innovations, especially in atomic layer deposition (ALD) and other advanced processes that meet chip manufacturers’ evolving needs. Lam Research Corporation (NASDAQ:LRCX) also has a solid backlog of orders from major semiconductor companies, indicating sustained demand for its products. Lam Research Corporation (NASDAQ:LRCX) strategic expansion into key Asian markets aligns with the region’s growing semiconductor industry, enhancing long-term growth prospects.
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.”
