Is Lam Research (LRCX) Still Undervalued? A Fresh Look at Its Valuation After the Recent Rally

If you’ve been tracking Lam Research (LRCX), you might have noticed its steady climb in recent months. While there hasn’t been a single blockbuster event grabbing the headlines, the stock’s recent movement is enough to catch the eye of any investor wondering if now is the right time to act. With market sentiment generally focused on growth opportunities in the semiconductor sector, every little uptick or pullback sparks a fresh round of debate about value and opportunity. Looking at the broader picture, Lam Research’s momentum has quietly gathered pace. The stock is up over 42% for the year and has managed a 13% gain in the past three months alone. That is not the kind of performance you ignore, especially considering a solid annual revenue and net income growth. Other recent developments in the semiconductor industry have kept investors on their toes, but Lam’s trajectory has so far remained on an upward trend. So after this run, is Lam Research trading at a discount, or is the market already factoring in every ounce of future growth?

Most Popular Narrative: 5.4% Undervalued

According to the most widely followed narrative, Lam Research appears to be trading below its estimated fair value. The narrative points to growth catalysts and margin expansion that could justify a higher valuation.

Rapidly rising AI workloads and the associated need for higher storage, bandwidth, and processing power are accelerating the adoption of advanced chip architectures (such as gate-all-around, 3D NAND, and advanced packaging). This increases demand for Lam's etch and deposition tools, supporting sustained revenue growth and robust order visibility.

Curious how Lam’s fair value is calculated? The secret lies in ambitious projections for earnings, revenue trajectories, and profit margins. This narrative uses bold assumptions about Lam’s future financial engine that might surprise even seasoned investors. Want to discover which metrics shape this tantalizing price target? Keep reading to reveal the forecast that has everyone talking.

Result: Fair Value of $108.87 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, there are key risks to consider, including geopolitical tensions and customer concentration, which could quickly shift the outlook for Lam Research.

Find out about the key risks to this Lam Research narrative.

Another View: What Does the SWS DCF Model Say?

While many see Lam Research as undervalued based on analyst forecasts and future growth potential, our DCF model suggests the stock could be overvalued from a purely cash flow perspective. Which approach truly reflects today’s market reality?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Lam Research for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Lam Research Narrative

If you have a different perspective or want to dig into the numbers yourself, it takes just a few minutes to craft your own take on Lam Research. Do it your way

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Lam Research.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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