LRCX - Lam Research: The Backbone Of The Semiconductor Industry

2024-04-14 02:49:11 ET

Summary

• Lam Research is a market leader in the semiconductor industry, providing essential wafer fabrication capital equipment.
• Even with semiconductor cyclical fluctuations, Lam Research has performed like a secular growth stalwart, with an EPS CAGR of 28% in the last 10 years.
• Continued demand from AI expansion augurs well for Lam's future.
• Lam Research is expensive, but with forecasted 3 year revenue CAGR of 15%, it is worth buying during market pullbacks.

Lam Research ( LRCX ) is the stalwart backbone of the semiconductor industry producing the wafer fabrication equipment required to produce semiconductors worldwide. While it doesn't have the monopoly status of ASML Holdings ( ASML ) with its advanced EUV lithography machines, it is an integral and essential part of the semiconductor food chain, without which most of the industry would not survive.

I own it and had planned to recommend it several times but often baulked at the cyclical, commodity nature of capital machinery and equipment for the semiconductor industry that usually has over-capacity in all its segments foundry, logic, and memory. The semiconductor industry has gone through cycles as we can see from the charts below for the industry and for the memory segment....

For further details see: