NVDA - Lam Research: It's Still All About Memory- Maintaining Buy

2024-07-11 13:30:42 ET

Summary

• We're reaffirming our buy-rating on Lam Research Corporation ahead of Q4 FY2024 results.
• We expect material outperformance in FY25 due to recovery of wafer fabrication equipment spend, specifically memory WFE spend.
• Memory WFE spending should see tailwinds in 2H24 and 2025 driven by HBM DRAM adoption and NAND demand recovery.
• We also think concerns over the sustainability of China sales will be offset by higher WFE spend recovery outside of China.
• We think Lam Research Corporation stock is better positioned to outperform expectations into 2025 and would recommend investors add on any pullback this quarter.

We're reaffirming our buy-rating on Lam Research Corporation ( LRCX ) ahead of its fourth quarter of FY2024 results at the end of the month, scheduled for July 31st. The stock has outperformed the S&P 500 (SP500) by 37% since our upgrade to buy in late November last year, as shown in our rating history chart below. We expect more material outperformance for LRCX in FY25 due to the recovery of wafer fabrication equipment spend or WFE in the back end of the year and in 2025, specifically memory WFE spend....

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