Lam Research (LRCX) Stock Trades Down, Here Is Why

What Happened?

Shares of semiconductor equipment maker Lam Research (NASDAQ:LRCX) fell 4.3% in the afternoon session after an analyst at Morgan Stanley downgraded the stock and the broader semiconductor sector faced a sell-off. The investment firm lowered its rating on Lam Research to 'Underweight' from 'Equal-Weight' and trimmed its price target to $92 from $94. The analysts' concerns stemmed from expectations that the company's growth in China and in the NAND memory markets would slow down after two strong years. The stock's decline also occurred amid wider weakness in the tech industry, as the Philadelphia SE Semiconductor index fell 2%. Several chip companies, including Nvidia and Micron, also saw their shares drop, partly due to worries about high valuations in the artificial intelligence space.

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What Is The Market Telling Us

Lam Research’s shares are very volatile and have had 21 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 20 days ago when the stock dropped 5.3% on the news that investors grew concerned about a slowdown in the chip industry following a weak forecast from peer company Texas Instruments. Texas Instruments, a major analog chip maker, gave a lackluster forecast, adding to worries that the semiconductor industry's recovery was sputtering. The company projected fourth-quarter revenue and profit that fell short of analysts' average estimates. This negative sentiment spread across the sector, with the Philadelphia Semiconductor Index declining 0.66%. The downturn in U.S. tech stocks prompted selling in overseas markets as well, particularly among large semiconductor firms. The broad-based selling occurred ahead of Lam Research's own first-quarter earnings results, which were scheduled for release after the closing bell.

Lam Research is up 120% since the beginning of the year, and at $159.27 per share, it is trading close to its 52-week high of $166.37 from November 2025. Investors who bought $1,000 worth of Lam Research’s shares 5 years ago would now be looking at an investment worth $3,755.

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