Lam Research Soars 109% YTD: Is LRCX Stock Still Worth Buying?

Lam Research Corporation LRCX has witnessed a remarkable run, showcasing a staggering 109% surge in its stock price this year so far. The stock has outperformed the Zacks Electronics – Semiconductors industry’s year-to-date (YTD) gain of 33.5%.

It has even outpaced major semiconductor manufacturing tool providers, including KLA Corporation KLAC, ASML Holding ASML and Applied Materials, Inc. AMAT. Shares of KLA Corporation, ASML Holding and Applied Materials have risen 80.4%, 42.5% and 42%, respectively.

LRCX YTD Price Return Performance

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’s Resilient 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 first quarter of fiscal 2026, total revenues rose 28% year over year to $5.32 billion and beat the Zacks Consensus Estimate by 2%, primarily driven by continued demand across the Systems and Customer Support Business Group segments.

Lam Research reported first-quarter non-GAAP earnings of $1.26 per share, which beat the consensus mark by 4.1%. The bottom line also increased 46.5% 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 first quarter, Lam Research’s non-GAAP operating margin rose to 35%, up 410 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 first-quarter results also highlight its effective cost management, which has enabled sustained profitability even amid fluctuating end-market demand.

AI and Data Center Chip Trends Aid LRCX’s Momentum

Lam Research is benefiting from the booming demand for artificial intelligence (AI) and datacenter chips, which require advanced fabrication technologies. The company’s deposition and etch solutions are critical for producing high-bandwidth memory (HBM) and advanced packaging technologies, which are essential for AI workloads.

In 2024, Lam Research’s shipments for gate-all-around nodes and advanced packaging exceeded $1 billion, and management expects this figure to triple to more than $3 billion by 2025. Additionally, the industry’s migration to backside power distribution and dry-resist processing presents growth opportunities for Lam’s cutting-edge fabrication solutions.

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.

Analysts’ expectations for the top and bottom lines indicate continued growth momentum for Lam Research in the years ahead. The Zacks Consensus Estimate for fiscal 2026 and 2027 revenues signifies a year-over-year increase of 14.1% and 12.1%, respectively. The consensus mark for fiscal 2026 and 2027 earnings per share indicates growth of 15.7% and 15.8%, respectively.

Valuation: LRCX Still Reasonably Priced

Even after the robust YTD rally, Lam Research stock doesn’t look expensive. LRCX currently trades at a forward price-to-earnings (P/E) multiple of 29.52, which is significantly lower than the industry’s 34.89. The company’s discounted valuation multiple aligns with its long-term growth potential.

Lam Research Forward 12-Month P/E Ratio

Compared with major semiconductor stocks, LRCX trades at a lower P/E multiple than ASML and KLA Corporation, while at a premium to AMAT. At present, ASML Holding, KLA Corporation and Applied Materials have forward 12-month P/E multiples of 32.19, 29.28 and 23.33, respectively.

Conclusion: Buy LRCX Stock Right Now

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

LRCX carries a Zacks Rank #2 (Buy) at present. 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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