In the week heading into the first quarter earnings report for its 2025 fiscal year (FY), Lam Research Corp. NASDAQ: LRCX stock was down nearly 15%. Furthermore, analysts were lowering their price targets for LRCX stock over concerns of slowing growth that would make it difficult to see the stock outperforming the market.
However, the stock is reversing course with a gain of over 4% in early trading the morning after the company’s earnings report. Is this a temporary lift or a sign that Lam Research may be proving its naysayers wrong? Get Lam Research alerts:Sign Up
Before reviewing what came out of the earnings report, it’s important to get a sense of what the company does and why that’s significant for investors. Semiconductors have been a volatile sector in the last four years, mostly to the upside. That’s because this is a sector that provides the “picks and shovels” that allow companies to build out their artificial intelligence (AI) infrastructure.
Lam Research in turn makes wafer-fabrication equipment and related services that the chipmakers need. In a world where more chips are needed in smaller spaces, Lam’s etch and deposition machines allow chips to be stacked vertically.
Lam Research Today$77.68 +1.11 (+1.45%) (As of 10/25/2024 ET)52-Week Range$57.44▼$113.00Dividend Yield1.18%P/E Ratio26.79Price Target$97.03
A Bullish Reversal May Be in Play
Analysts aren’t necessarily bearish on LRCX stock. Heading into earnings, the consensus price target for the stock was $141.28. That suggested an increase of over 90% in 12 months. And it comes after the company completed a 10-for-1 stock split in October.
But the concerns weren’t without some merit. Prior to the fourth quarter of FY2024, Lam Research had delivered several quarters in which revenue and earnings came in lower year over year (YOY). This makes sense when you consider where the company is in the semiconductor chain.
Many chipmakers were forecasting slower growth. If companies need fewer picks and shovels, those companies will need fewer handles and spades.
However, the trend shifted in the fourth quarter of FY 2024. This came at a time when many chipmakers started to upgrade their internal forecasts. But as investors know, one time doesn’t make a pattern. That’s why it’s significant that this is now two consecutive quarters where Lam Research delivered a YOY beat on revenue and earnings.
Lam Research Co. (LRCX) Price Chart for Sunday, October, 27, 2024
Artificial Intelligence Continues to Provide a Tailwind
The headline numbers in the company’s earnings report showed topline revenue of $4.17 billion, higher than the $4.06 billion that analysts were expecting. On the bottom line, Lam delivered earnings per share (EPS) of 86 cents, above expectations of 81 cents.
Although the company won’t offer full-year guidance until next quarter. It did project its second-quarter revenue to be $4.3 billion, which is higher than the current forecast for $4.22 billion. The company is forecasting EPS of 87 cents, which is above estimates for 85 cents.
And according to Lam Research’s president and chief executive officer, Timothy Archer, it’s demand for AI applications that will continue fueling this growth. Although not giving specific numbers, the company sees strong growth in leading-edge logic nodes (NAND) as well as areas such as high-bandwidth memory (HBM).
LRCX Stock May Have Confirmed Support
However, while it may be too early to go all in on the stock, it’s important to note that the bounce after earnings may be confirming a double bottom for the stock around $72 per share. The question is whether the stock will continue to move higher. At one point in pre-market trading the stock climbed near $78 before pulling back to around $75. Before you consider Lam Research, you’ll want to hear this.MarketBeat keeps track of Wall Street’s top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on… and Lam Research wasn’t on the list.While Lam Research currently has a “Moderate Buy” rating among analysts, top-rated analysts believe these five stocks are better buys.View The Five Stocks Here Unlock the timeless value of gold with our exclusive 2025 Gold Forecasting Report. Explore why gold remains the ultimate investment for safeguarding wealth against inflation, economic shifts, and global uncertainties. Whether you’re planning for future generations or seeking a reliable asset in turbulent times, this report is your essential guide to making informed decisions.Get This Free Report
Like this article? Share it with a colleague.
Link copied to clipboard.
