This Incredibly Cheap Semiconductor Stock Is About to Go on a Terrific Bull Run

Core Viewpoint - Lam Research's stock surged over 6% following the release of its fiscal 2025 Q3 earnings, driven by stronger-than-expected results and guidance indicating robust demand for semiconductor manufacturing equipment [1][2]. Group 1: Financial Performance - Lam Research reported a 24% year-over-year growth in revenue for the previous quarter, with non-GAAP net income growing at 30% [3]. - The company expects revenue in the current quarter to reach $5 billion, significantly higher than the $4.6 billion consensus estimate, indicating a potential year-over-year increase of 29% [9]. - Earnings are projected to increase at a faster pace of 48% due to margin expansion, with a long-term revenue target of $25 billion to $28 billion by 2028, compared to $16 billion in 2024 [10]. Group 2: Market Demand and Trends - The demand for high-bandwidth memory (HBM) is a significant growth driver for Lam Research, accounting for 43% of its total revenue [4]. - The HBM market is expected to generate $35 billion in revenue this year, up from a previous estimate of $30 billion, driven by increased demand from companies like Nvidia and AMD [5]. - The HBM market is projected to exceed $100 billion in annual revenue by 2030, suggesting solid long-term demand for Lam's memory manufacturing equipment [7]. Group 3: Competitive Positioning - Lam Research's management believes the growing complexity of chips and its strong product portfolio position the company to gain a larger share of the wafer and fabrication equipment market [8]. - The company has not observed significant changes in customer plans despite the ongoing tariff war, which supports its positive outlook [8]. - Lam Research is currently trading at less than 20 times trailing earnings, which is a discount compared to the Nasdaq-100 index's trailing earnings multiple of 27, indicating potential for investment [11]. Group 4: Analyst Outlook - The stock's 12-month price target of $90, as per 33 analysts, suggests a potential gain of 26% from current levels, with expectations for better performance due to healthy bottom-line growth [12].