Sands Capital, an investment management company, released its “Sands Capital Select Growth Fund” Q4 2024 investor letter. A copy of the same can be downloaded here. Select Growth primarily targets U.S. companies that are leading the way in crucial areas of positive structural transformation within the economy. The fund returned 8.8% (net) in the fourth quarter compared to 7.1% return for the benchmark, the Russell 1000 Growth Index. The fund returned 24.3% over the one year period compared to 33.4% return for the Index. You can check the fund’s top 5 holdings to know more about its best picks for 2024.
In its fourth quarter 2024 investor letter, Sands Capital Select Growth Fund emphasized stocks such as Lam Research Corporation (NASDAQ:LRCX). Lam Research Corporation (NASDAQ:LRCX) designs, manufactures, markets, refurbishes, and services semiconductor processing equipment. The one-month return of Lam Research Corporation (NASDAQ:LRCX) was -4.89%, and its shares lost 24.84% of their value over the last 52 weeks. On March 31, 2025, Lam Research Corporation (NASDAQ:LRCX) stock closed at $72.70 per share with a market capitalization of $93.322 billion.
Sands Capital Select Growth Fund stated the following regarding Lam Research Corporation (NASDAQ:LRCX) in its Q4 2024 investor letter:
“We exited Lam Research Corporation (NASDAQ:LRCX) on valuation concerns. The stock’s 12-month forward earnings multiple more than doubled from its 2022 low to the end of 2024’s third quarter. This valuation reflected lofty expectations for artificial intelligence (AI)-driven dynamic random access memory (DRAM) demand and NAND flash memory capital expenditure. While both DRAM and NAND stand to benefit from AI use cases, we believe this is likely to be overwhelmed by a muted recovery in consumer categories and potential deterioration in Chinese semiconductor capital expenditure. The latter concern became more acute following ASML Holding’s third-quarter 2024 earnings results, in which the business guided for its China revenue to fall by nearly 50 percent in 2025.
Looking past the valuation concerns, we maintain conviction in Lam’s long-term earnings power, given its leadership position in etch and deposition wafer fabrication equipment and the longer-term demand and technology trends. DRAM and NAND growth can inflect with improvements and scaling in AI (e.g., more memory use in inferencing, new packaging technology to improve input and output between memory and logic chips), and etch and deposition will become more important with new gate-all-around transistor architecture. We also expect the business to be a primary beneficiary of the next PC and smartphone replacement cycle, though we have little visibility into the cycle’s timing.”
A technician operating an automated semiconductor processing machine with laser accuracy.
Lam Research Corporation (NASDAQ:LRCX) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 84 hedge fund portfolios held Lam Research Corporation (NASDAQ:LRCX) at the end of the fourth quarter which was 58 in the previous quarter. In the second quarter of fiscal 2025, Lam Research Corporation (NASDAQ:LRCX) delivered $4.38 billion in revenues, an increase of 5% from the prior quarter. While we acknowledge the potential of Lam Research Corporation (NASDAQ:LRCX) as an investment, our conviction lies in the belief that 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 as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
We covered Lam Research Corporation (NASDAQ:LRCX) in another article, where we shared the list of best semiconductor stocks to buy according to billionaires. In addition, please check out our hedge fund investor letters Q4 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.