LRCX - Capitalizing On The Semiconductor Rebound: Lam Research Is A Compelling Buy

2024-07-01 23:12:23 ET

Summary

• Lam Research is part of the semiconductor capital equipment industry, which was in a cyclical downturn in 2023.
• Industry experts anticipate semiconductor capital equipment spending to recover in the latter half of 2024, potentially boosting the company's stock performance in 2025.
• It benefits from AI adoption and the need for higher performance and more power-efficient chips.
• The company has a strong switching cost moat.

I wrote my last article on Lam Research ( LRCX ), titled Lam Research: An Opportune Moment To Add The Stock, on Oct. 10, 2023, with a buy recommendation. Since then, the stock has been up around 66% compared to the S&P 500 index's rise of 26%. Although the stock has made a significant move over the last eight months, there is still a lot of potential upside left.

Lam is a Wafer Fabrication Equipment ("WFE") company. The WFE industry had a severe cyclical downturn in the first half of 2023. When I rated the company a buy last October, it looked like WFE spending was bouncing off a possible bottom. Zacks published an article in April of this year that cited information from SEMI (emphasis added): ...

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