How much a stock's price changes over time is a significant driver for most investors. Not only can price performance impact your portfolio, but it can help you compare investment results across sectors and industries as well.
Another thing that can drive investing is the fear of missing out, or FOMO. This particularly applies to tech giants and popular consumer-facing stocks.
What if you'd invested in Lam Research (LRCX) ten years ago? It may not have been easy to hold on to LRCX for all that time, but if you did, how much would your investment be worth today?
Lam Research's Business In-Depth
With that in mind, let's take a look at Lam Research's main business drivers.
Headquartered in Fremont, CA, Lam Research Corporation supplies wafer fabrication equipment and services to the semiconductor industry. In addition, it serves the related markets that rely on semiconductor processes and require production-proven manufacturing capabilities, such as complementary metal-oxide-semiconductor image sensors and micro-electromechanical systems (MEMS).
Lam holds a strong position in deposition and etch, which address numerous critical steps in the fabrication process with the goal of reducing defect rates, improving yields, lowering costs and reducing the processing time. Its core competencies lie in areas such as nanoscale applications enablement, chemistry, plasma and fluidics, and advanced systems engineering.
The company caters to the needs of semiconductor memory, foundry and integrated device manufacturers (IDMs) by providing them with integrating hardware, process, materials, software, and process control, enabling results on the wafer.
The company also addresses back-end wafer-level packaging processes by offering advanced packaging solutions that support fan-out panel-level packaging, thus meeting the requirement for 3D stacking of high bandwidth memory (HBM).
Lam reported revenues of $14.91 billion in fiscal 2024, down 14.5% from fiscal 2023.
It serves three market segments — Memory, Foundry and Logic/Other from where it generated 42%, 40% and 18% of its total revenues in fiscal 2024, respectively.
The company’s sales of new leading-edge equipment in deposition, etch and clean markets amount to its systems revenues, which stood at $8.9 billion (60% of the total revenues).
In addition, Lam’s Customer Support Business Group revenues comprise sales of customer service, spares, upgrades, and non-leading-edge equipment from Lam’s Reliant product line. Customer support-related revenues and other revenues were $5.98 billion (40% of the total revenues).
The revenue distribution by geography in fiscal 2024 was as follows — Korea contributed 19%, Taiwan 11%, Japan 10%, China 42%, U.S accounted for 7%, Europe 5% and South East Asia contributed 6%.
Being a leading producer of specialized equipment, most of the competition comes from other large equipment makers, such as Hitachi, Tokyo Electron and Applied Materials.
Bottom Line
Anyone can invest, but building a successful investment portfolio takes a combination of a few things: research, patience, and a little bit of risk. So, if you had invested in Lam Research a decade ago, you're probably feeling pretty good about your investment today.
A $1000 investment made in May 2015 would be worth $9,287.84, or a gain of 828.78%, as of May 2, 2025, according to our calculations. This return excludes dividends but includes price appreciation.
Compare this to the S&P 500's rally of 165.81% and gold's return of 163.05% over the same time frame.
Going forward, analysts are expecting more upside for LRCX.
Lam Research is riding on its strength across 3D DRAM and advanced packaging technologies. Growing etch and deposition intensity owing to increasing technology inflections in 3D architectures is a plus. A rebound in the System business owing to improving memory spending is a positive. Strategic investments in research and development activities position it well to capitalize on the growing wafer fab equipment (WFE) spending. For 2025, WFE is expected to be approximately $100 billion. Foundry/logic, DRAM and NAND investments are expected to be higher year over year. Solid demand related to high-bandwidth memory is a plus. However, global spending on mature nodes is likely to remain soft in the near term. Growing tensions between the United States and China are major concerns. The stock has underperformed its industry in the past year.
Over the past four weeks, shares have rallied 9.98%, and there have been 10 higher earnings estimate revisions in the past two months for fiscal 2025 compared to none lower. The consensus estimate has moved up as well.
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Lam Research Corporation (LRCX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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