Lam Research Earnings: We Raise Our Forecast and Fair Value to $830 From $680 on Stronger Growth

We have raised our fair value estimate for wide-moat Lam Research to $830 from $680 after raising our long-term growth estimates for the firm. We believe Lam will benefit from strong semiconductor investment over the next three years. After a significant downturn for memory equipment in calendar 2023, we expect a multiyear rebound for both NAND and DRAM spending, supported by high-bandwidth memory demand for artificial intelligence. We also expect strong medium-term growth for Lam’s nonmemory equipment, supported by rising chip complexity and expanding supply. Lam’s June quarter results and September quarter guidance were positive and aligned with our updated forecast. We see Lam as well-positioned in memory and logic chipmaking customers, allowing it to benefit from secular growth trends like AI. We continue to see shares as overvalued but believe long-term investors can wait for a better entry point for a high-quality stock.