LRCX Stock Soars 33% in Three Months: Is There More Room for Growth?

Lam Research Corporation LRCX is among the best-performing technology stocks in the broader equity market amid ongoing macroeconomic challenges and geopolitical tensions. LRCX stock has delivered a robust 33% gain over the past three months. This performance easily beats the broader Zacks Electronics – Semiconductors industry, which gained 4.5% in the same period.

It has even outpaced major semiconductor players, including ASML Holding ASML, KLA Corporation KLAC and NVIDIA Corporation NVDA. Shares of ASML Holding, KLA Corporation and NVIDIA have risen 27%, 19.5% and 5.2%, respectively, over the past three months.

This outperformance shows investors are becoming increasingly confident in Lam Research’s long-term prospects, even in a volatile market shaped by trade conflicts and geopolitical risks. We believe that LRCX stock will sustain this upward trajectory, at least in the near term, making it worth buying for now.

Lam Research Three-Month Price Return Performance

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Lam Research’s Robust Financial Performance

Despite ongoing macroeconomic challenges, geopolitical issues, and trade and tariff wars, LRCX’s financials remain impressive. In the company’s last reported financial results for the second quarter of fiscal 2026, total revenues rose 22% year over year to $5.34 billion and beat the Zacks Consensus Estimate by 2.1%, primarily driven by continued demand across the Systems and Customer Support Business Group segments.

Lam Research reported second-quarter non-GAAP earnings of $1.27 per share, which beat the consensus mark by 8.5%. The bottom line also increased 39.6% on a year-over-year basis.

Lam Research Corporation Price, Consensus and EPS Surprise

Lam Research Corporation price-consensus-eps-surprise-chart | Lam Research Corporation Quote

Expanding its manufacturing operations in Asia has also helped the company lower costs and improve margins. In the second quarter, Lam Research’s non-GAAP operating margin rose to 34.3%, up 360 basis points from the year-ago quarter, which is impressive, considering the challenging macroeconomic environment.

This strong financial performance reinforces Lam Research’s resilience in navigating an evolving semiconductor cycle. As demand grows for advanced nodes, LRCX’s specialized technology in etch and deposition tools for high-aspect-ratio structures positions it well to capitalize on this trend. The company’s second-quarter results also highlight its effective cost management, which has enabled sustained profitability.

AI Chip Demand Boosts LRCX’s Prospects

Lam Research is capitalizing on AI trends. It builds the tools chipmakers need to manufacture next-generation semiconductors, including high-bandwidth memory (HBM) and chips used in advanced packaging. These technologies are vital for powering AI and cloud data centers.

Lam Research’s products are not only critical but also innovative. For example, its ALTUS ALD tool uses molybdenum to improve speed and efficiency in chip production. Another product, the Aether platform, helps chipmakers achieve higher performance and density. These are essential capabilities as demand for advanced AI chips continues to increase.

In 2025, Lam Research’s revenues from advanced packaging grew significantly, and management anticipates strong 40% year-over-year growth for 2026. The industry’s migration to backside power distribution and dry-resist processing presents growth opportunities for LRCX’s cutting-edge fabrication solutions.

These trends are aiding Lam Research’s financial performance. The company has demonstrated consistent execution, maintaining quarterly revenues of more than $5 billion for the past three consecutive quarters, reflecting solid demand from leading chipmakers such as Taiwan Semiconductor Manufacturing and Samsung.

With AI-driven investments accelerating, Lam Research’s leading position in etch and deposition makes it a key beneficiary of the ongoing semiconductor spending cycle. The Zacks Consensus Estimate for fiscal 2026 and 2027 revenues implies a year-over-year increase of 20.2% and 22.9%, respectively. The consensus mark for fiscal 2026 and 2027 earnings per share indicates growth of 26.6% and 26.9%, respectively.

Robust Growth Forecasts Justify LRCX’s Lofty Valuation

Lam Research stock currently trades at a premium to the industry. Its forward 12-month price-to-earnings (P/E) ratio of 35.16 exceeds the industry’s average of 30.87. However, the company’s strong growth prospects amid AI-driven demand for advanced nodes justify this premium valuation.

Lam Research Forward 12-Month P/E Ratio

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Compared with major semiconductor equipment providers, LRCX trades at a lower P/E multiple than ASML, while at a premium to KLAC and NVDA. At present, ASML Holding, KLA Corporation and NVIDIA have forward 12-month P/E multiples of 39.26, 33.73 and 23.12, respectively.

Conclusion: Buy LRCX Stock for Now

Lam Research’s solid financial performance and strategic focus on AI-driven growth make it a compelling investment option right now despite lofty valuations. The company’s expanding market share in AI and datacenter fabrication, coupled with innovative product launches, strengthens its competitive positioning.

Currently, Lam Research sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Zacks Names #1 Semiconductor Stock

This under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.

With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.

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This article originally published on Zacks Investment Research (zacks.com).

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