Lam Research Corporation (LRCX): A Bull Case Theory

We came across a bullish thesis on Lam Research Corporation (LRCX) on Substack by Long-Term Pick. In this article, we will summarize the bulls’ thesis on LRCX. Lam Research Corporation (LRCX)’s share was trading at $83.73 as of Feb 10^th. LRCX’s trailing and forward P/E were 25.45 and 21.98 respectively according to Yahoo Finance.

Lam Research (LRCX) has demonstrated solid financial performance, with revenue increasing 5% quarter-over-quarter to $4.38 billion and operating income improving to 30.5% of revenue. Net income reached $1.191 billion, driving a 7% increase in diluted EPS to $0.92. The company continues to strengthen its market position, with China contributing 31% of revenue, and has provided a positive outlook, forecasting $4.65 billion in revenue for the next quarter. A major breakthrough with Aether® technology enhances EUV lithography by improving resolution and yield while offering sustainability benefits through reduced energy and chemical consumption. This innovation has already gained validation from a leading memory manufacturer, reinforcing LRCX’s role in enabling precise, low-defect patterning for advanced DRAM nodes.

Despite these positives, LRCX faced minor setbacks. Gross margins declined slightly, and cash, cash equivalents, and restricted cash dropped to $5.7 billion. Deferred revenue also saw a slight decline to $2.032 billion. Additionally, geopolitical tensions and regulatory challenges present ongoing risks, while supply chain disruptions could impact manufacturing and sales.

Given these factors, the fair price estimate for LRCX has been adjusted from $102 to $88, reflecting a reduction in projected “additional” growth, now totaling 17%. While risks remain, the company’s technological leadership, market expansion, and financial strength continue to support a strong investment case. If supply chain issues stabilize and geopolitical risks ease, LRCX could see further upside, but the revised valuation accounts for a more cautious growth outlook.

Lam Research Corporation (LRCX) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 58 hedge fund portfolios held LRCX at the end of the third quarter which was 84 in the previous quarter. While we acknowledge the risk and potential of LRCX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. 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: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None. This article was originally published at Insider Monkey.