- Lam Research supplies machines and tools to chip memory manufacturers as well as foundry plays.
- As a result of the supply-demand imbalance and investors' confidence, the company's share price has appreciated much more than the sector's average.
- This outperformance looks to continue despite high investments in capacity, which should be rapidly absorbed by upbeat demand, leading to more sales.
- Learning from the past, there was a similar situation about eight years ago which helps to shed light on possible over-supply dynamics.
- With higher growth and cash generation capability compared to peers, Lam is still a buy, but the stock is recommended only for those who can stomach volatility.
For further details see:
Lam Research: Beneficiary Of Supply-Demand Imbalance