Jim Cramer’s Top 10 Must-Watch Stocks for Savvy Investors

4. Lam Research Corporation (NASDAQ:LRCX)

Number of Hedge Fund Investors: 84

Jim Cramer points out that Lam Research Corporation (NASDAQ:LRCX)’s stock has dropped significantly, from $1,300 to $730. He believes this decline may be an overreaction given Lam Research Corporation (NASDAQ:LRCX)’s strong performance and fundamentals. While he sees this as a buying opportunity, Cramer advises a cautious approach. He suggests buying Lam Research Corporation (NASDAQ:LRCX) gradually rather than all at once to avoid potential losses.

 “Lam Research is going down too much now. I know this is dangerous to say, but when you have a phenomenal company like Lam Research, and it’s down from $1,300 to $730, that to me is an overreaction. I’d rather be a buyer, but buy it slowly — don’t buy it all at once, as that will only lead to pain.”

In its June 2024 earnings report, Lam Research Corporation (NASDAQ:LRCX) revealed $3.87 billion in revenue, largely driven by strong system sales and customer support services. Lam Research Corporation (NASDAQ:LRCX)’s performance was solid, with a rise in customer support revenue from the previous quarter. Its broad global presence, including significant revenue from China, positions it well to benefit from the growing demand for semiconductors.

Looking forward, Lam Research Corporation (NASDAQ:LRCX) projects revenues of $4.05 billion for the September 2024 quarter, indicating continued growth. Lam Research Corporation (NASDAQ:LRCX) has also increased its quarterly dividend by 15%, showing confidence in its long-term success. Ongoing investments in research and development further strengthen Lam Research Corporation (NASDAQ:LRCX)’s role in the semiconductor equipment market, especially as the need for advanced chips continues to rise.

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.”