Lam Research (LRCX): Valuation Check After Analyst Upgrades and AI-Driven Chip Spending Optimism

Lam Research (LRCX) just caught investors attention after a cluster of upbeat Wall Street calls tied its future even more tightly to AI driven chip spending and a potential equipment upcycle.

See our latest analysis for Lam Research.

Those upbeat calls are landing on a stock that already has strong momentum, with Lam’s share price up 22.9 percent over the past month and a 141.9 percent year to date share price return, alongside a 1 year total shareholder return of 139.7 percent. This signals that investors are leaning into the AI equipment story rather than fading it.

If AI infrastructure is on your radar, this is also a good moment to scan the broader landscape and discover high growth tech and AI stocks that could benefit from similar themes.

After such a powerful run, and with Lam now trading slightly above the average analyst price target, investors have to ask if this AI powered momentum still leaves room for upside or if the market is already discounting years of growth.

Most Popular Narrative Narrative: 9.3% Overvalued

Compared to Lam Research’s last close at $175.27, the most followed narrative pegs fair value at $160.30, implying the market is running ahead of modeled cash flows.

Fair Value Estimate has risen slightly, from $158.52 to $160.30, reflecting modestly stronger profitability assumptions.

Future P/E has risen marginally, from 33.31x to 33.40x, signaling a modest uptick in the multiple applied to forward earnings.

Read the complete narrative.

Want to see why a richer earnings multiple suddenly looks acceptable here? The fair value hinges on sustained margin strength and carefully modeled mid single digit growth, underpinned by a specific discount rate that quietly reshapes the upside narrative.

Result: Fair Value of $160.30 (OVERVALUED)

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

However, ongoing geopolitical tensions and highly cyclical WFE spending could derail AI driven demand expectations and quickly challenge today’s richer valuation narrative.

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

Build Your Own Lam Research Narrative

If you see the story differently or want to dig into the numbers yourself, you can build a custom Lam Research view in minutes: Do it your way.

A great starting point for your Lam Research research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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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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