LRCX's Akara Etch Wins Gain Momentum: Can it Expand DRAM Share?

Lam Research (LRCX) is witnessing early progress in Akara, its latest conductor etch tool. In the fourth quarter of fiscal 2025, Akara won several new applications at a major Dynamic Random Access Memory (DRAM) manufacturer. This shows that customers are starting to use the tool for advanced memory production.

Akara is designed to meet the needs of modern DRAM. Akara combines direct power coupling with plasma pulsing, which helps it maintain the uniform depth and profile control required for DRAM scaling. These improvements are important as DRAM technology is moving to smaller nodes as customers shift to DDR5, LPDDR5 and high-bandwidth memory (HBM).

In the fourth quarter, Lam Research’s DRAM revenues were down compared with the previous quarter because of project timing. However, for fiscal 2025, Lam Research recorded its highest DRAM revenues so far, where the growth was driven by node upgrades and higher demand for HBM. Lam Research is also gaining share in DRAM with Akara helping in this progress.

Additionally, growing usage of artificial intelligence (AI) is another driver, which is increasing the need for greater performance capabilities. Also, moving from 3D to 4D packaging requires about 30% more wafers to produce the same amount of memory bits. This is driving the demand for wafer fabrication equipment, including etch tools like Akara.

As memory makers continue to invest heavily in DDR5 and HBM, combined with Lam Research’s recent wins with Akara, which demonstrates its early traction, Lam Research appears well-positioned to capitalize on this opportunity to grow its share in the DRAM market.

How Competitors Fare Against Lam Research

Semiconductor heavyweights like Applied Materials (AMAT) and ASML Holding (ASML) are also seeing strong momentum as memory makers invest in next-generation technologies.

In the third quarter of fiscal 2025, Applied Materials secured new production positions at major DRAM makers for its most advanced chemical vapor deposition system, which is used for next-generation gapfill technology, and its new Pioneer dielectric patterning system. Applied Materials’ etch business also crossed $1 billion in quarterly revenues for the very first time, supported by increased customer spending in high-performance DRAM for AI workloads.

In the second quarter of 2025, ASML Holding highlighted strong customer demand for its products. The demand was driven by ASML Holding’s DRAM and logic customers, which are ramping leading-edge nodes using ASML Holding’s NXE:3800E EUV systems. Additionally, ASML Holding noted that multiple DRAM customers are adopting EUV lithography, which helps in shortening cycle time and lowering costs.

LRCX's Price Performance, Valuation & Estimates

Shares of Lam Research have gained 43.5% year to date compared with the Zacks Electronics – Semiconductors industry’s growth of 16.4%.

LRCX YTD Price Return Performance

From a valuation standpoint, its forward price-to-earnings ratio of 23.13 is significantly below the industry’s average of 33.33.

LRCX Forward 12-Month P/E Ratio

The Zacks Consensus Estimate for Lam Research’s fiscal 2026 and 2027 earnings implies a year-over-year increase of approximately 6.8% and 9.2%, respectively. Earnings estimates for fiscal 2026 and 2027 have been revised upward in the past seven days.

Lam Research currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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