Lam Research(LRCX) The Motley Fool·2025-01-04 23:30AI Infrastructure Spending - Spending on AI infrastructure is expected to reach 749 billion by 2028 [1][2] - The growth in AI spending is driven by the increasing adoption of AI services across various sectors, including cloud computing and memory markets [2][11] Microsoft - Microsoft's AI business is on track to surpass an annual revenue run rate of 24.1 billion in Q1 FY2025, with Azure cloud service revenue growing 23% [4] - AI contributed 12 percentage points to Azure's growth, indicating significant influence on Microsoft's cloud business [5] - Microsoft Azure's market share in cloud infrastructure increased to 20%, slightly outpacing the overall cloud infrastructure spending growth of 23% [6] - Analysts expect Microsoft's earnings to grow 10% in FY2025 to 2 trillion global cloud spending by 2030 [7][8] - Microsoft's stock is trading at 35 times earnings, which is relatively attractive compared to the Nasdaq-100 index's earnings multiple of 33 [9] Lam Research - Lam Research's stock underperformed in the past year, losing 2%, but is expected to rebound in 2025 due to a recovery in the memory market [10] - Capital spending on DRAM is forecasted to increase by 25% in 2025, with NAND flash storage spending expected to rise by 10% [11] - The company derives 35% of its revenue from selling semiconductor manufacturing equipment to memory makers, positioning it to benefit from the memory market recovery [13] - Lam's Q1 FY2025 revenue increased 20% year-over-year to 0.86 [14] - Analysts expect Lam's earnings to grow 17% in both the current and next fiscal years, following a 14% decline in revenue in FY2024 [14] - Lam's stock is trading at 24 times earnings, a discount to the Nasdaq-100 index's earnings multiple of 33, with a 12-month median price target of $95, indicating a potential 32% upside [15][16]