Lam Research's price target was raised to $110.53 as analysts cite strengthening demand for AI-driven wafer fab equipment, margin outperformance, and robust China outlook, partly offset by valuation concerns.
Analyst Commentary
- Bullish analysts highlight strengthening demand for wafer fab equipment (WFE) driven by artificial intelligence inflection, increased NAND and DRAM high bandwidth memory spending, and accelerating AI infrastructure investments benefitting Lam Research's product exposure.
- Outperformance in operating margin and return on equity relative to peers, combined with growing demand for specialized semiconductor manufacturing equipment, is seen as supportive of higher price targets.
- Robust China demand outlook into the second half of 2025, alongside improved visibility from leading-edge customers, is expected to drive earnings growth and makes stretch targets for future EPS appear achievable.
- Competition dynamics and shifting WFE market share, especially heightened competition from Chinese manufacturers and technology transitions, result in differentiated exposure for Lam versus peers like Applied Materials, reducing Lam's risk in certain key segments.
- Bearish analysts cite concerns that Lam's recent rally outpaces near-term earnings upside potential, particularly given that strong memory pricing may take time to translate into new tool demand, and warn that current valuation may be stretched.
What's in the News
- Stifel raised its price target for Lam Research to $110 (from $92), maintaining a Buy rating, citing accelerating AI infrastructure investments expected to benefit Lam in 2026 (Periodicals).
- Lam Research announced VECTOR TEOS 3D, a deposition tool aimed at solving advanced 3D chip packaging challenges for AI and HPC chips, promising significant yield and productivity improvements at scale (Key Developments).
- Lam and JSR/Inpria entered into a broad cross-licensing and collaboration agreement to advance EUV patterning and deposition processes for next-gen chip manufacturing, while agreeing to dismiss all pending patent litigation between them (Key Developments).
- The company switched its independent auditor from Ernst & Young to KPMG, effective for the 2026 fiscal audit (Key Developments).
- Lam increased its quarterly dividend by 13% to $0.26 per share, completed a $2.37 billion buyback (repurchasing 2.39% of shares), and issued guidance for September quarter revenue of $5.2B (+/- $300M) and EPS of $1.20 (+/- $0.10) (Key Developments).
Valuation Changes
Summary of Valuation Changes for Lam Research
- The Consensus Analyst Price Target remained effectively unchanged, moving only marginally from $109.10 to $110.53.
- The Consensus Revenue Growth forecasts for Lam Research has risen from 8.5% per annum to 9.1% per annum.
- The Net Profit Margin for Lam Research remained effectively unchanged, moving only marginally from 28.32% to 27.89%.
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