Lam Research (LRCX): Assessing Valuation Following JSR Partnership and Launch of VECTOR TEOS 3D Tool

If you have been weighing up what to do with Lam Research (LRCX) after their recent run, you are not alone. The company has sparked fresh excitement with a cross-licensing agreement alongside JSR Corporation, aiming to advance chipmaking through next-generation patterning and dry resist technologies. Not only that, Lam’s new VECTOR TEOS 3D deposition tool is tackling real pain points in the increasingly complex world of 3D chip packaging, a central challenge as AI and high-performance computing keep scaling up. These moves position Lam as a continuing catalyst in the semiconductor ecosystem. The question remains: are they setting the stage for more sustained growth?

The past year has offered a window into how investors view Lam’s innovation story. Over the past twelve months, the stock has delivered a 59% return, outperforming much of the sector, and there has been a surge in momentum, especially in the past three months. In the larger context, Lam has continued introducing new technology to address demands created by AI, while also navigating boardroom changes and shareholder proposals. Taken together, these events keep Lam at the center of industry attention, with market perception shifting alongside each strategic update.

So, after this latest string of announcements and a strong price performance, should investors think Lam Research is undervalued at these levels, or has the market already factored in its future growth?

Most Popular Narrative: 10.4% Overvalued

The prevailing narrative suggests Lam Research is currently priced above what analysts believe is fair value, based on their latest forecast and quantitative analysis. This view is shaped by projections of future growth, market share, and margin trends.

"Lam's leadership in new process technologies, like ALD Moly for metal deposition and advanced packaging solutions (SABRE 3D systems), positions the company to capture an increasing share of spend on next-generation chip manufacturing. This could lead to market share gains, higher average selling prices, and expanding gross margins over the long term."

The debate over Lam’s price tag is just heating up. Want to know which bold forecasts and profit levers push the stock beyond its “fair” range? The key analyst assumptions and surprising growth bets may completely change how you view this industry leader. What exactly are analysts expecting, and does it justify the premium? Discover the drivers and tensions behind this valuation.

Result: Fair Value of $109.10 (OVERVALUED)

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

However, ongoing geopolitical tensions and reliance on a handful of major customers could easily shift expectations and challenge Lam’s growth outlook.

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

Another View: SWS DCF Model Challenges the Market

Looking at Lam Research through our DCF model tells a different story, suggesting the shares may trade at a richer valuation than the company’s future cash flows alone would justify. Which reality should you believe?

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

Stay updated when valuation signals shift by adding Lam Research to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Lam Research Narrative

Of course, if you want to see the numbers for yourself or craft your own take, it’s easy to shape your own analysis in just a few minutes. Do it your way.

A good starting point is our analysis highlighting 3 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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