Goldman Sachs Starts Coverage on Lam Research (LRCX) Stock, Gives Buy

Lam Research Corporation (NASDAQ:LRCX) is one of the Most Promising AI Stocks to Buy Now. Goldman Sachs initiated coverage on the company’s stock with a “Buy” rating and a price objective of $115.00. The firm cited the company’s high relative exposure to deposition and etch processes as the key factors. These are the areas where intensity can increase in semiconductor manufacturing, added the firm. Furthermore, it noted that Lam Research Corporation (NASDAQ:LRCX) has a leading share of NAND equipment upgrades, positioning it to benefit as NAND suppliers emphasize upgrading the existing equipment instead of adding new capacity.

Also, the firm anticipates Lam Research Corporation (NASDAQ:LRCX) to outperform its peers as the broader NAND market sees recovery from a low base. The company can benefit disproportionately from this recovery, added Goldman Sachs. The firm also cited Lam Research Corporation (NASDAQ:LRCX)’s market leadership in High Bandwidth Memory (HBM) as an additional factor that can augment the performance. The company’s integration of AI in its own service offerings, like predictive maintenance and the Dextro Cobot, exhibits its commitment to leveraging AI for operational improvements. Apart from enhancing the value proposition to customers, it also positions Lam Research Corporation (NASDAQ:LRCX) to capitalize on the growing intersection between AI and semiconductor manufacturing.

The acceleration of AI technologies can fuel demand for advanced semiconductor devices and can ramp up the need for Lam Research Corporation (NASDAQ:LRCX)’s cutting-edge fabrication tools, mainly those important for TSV (Through-Silicon Via) formation, as well as advanced packaging processes important for AI chip production.

Lam Research Corporation (NASDAQ:LRCX) is an AI-business enabler that produces advanced wafer fabrication and packaging tools critical for manufacturing sophisticated AI chips. Columbia Threadneedle Investments, an investment management company, released its Q1 2025 investor letter. Here is what the fund said:

“The portfolio’s holding in semiconductor equipment manufacturer Lam Research Corporation (NASDAQ:LRCX) contributed positively to performance as the stock moved higher during the first quarter. We are excited about the prospects for Lam Research, as the firm recently announced its ATLUS Halo, a tool that harnesses the capabilities of the metal molybdenum in the production of leading-edge semiconductors. Tungsten-based atomic layer deposition, pioneered by Lam, has been the predominant metallization technique for semiconductor chip deposition for over two decades, but the switch to molybdenum will help create memory and logic semiconductors for the future. Chip makers will need to shift beyond what is currently possible with tungsten, and this change will require many to update with Lam equipment, leading to increased sales. The fund also held a position in Japanese semiconductor company Renesas Electronics, which contributed to performance relative to the benchmark. The first quarter saw a large rotation to international stocks outperforming domestic securities, due primarily to concerns about U.S. tariffs, and the fund’s exposure to international firms like Renesas proved beneficial.”

While we acknowledge the potential of LRCX as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.