Lam Research Gains 18% in a Month: Should You Buy the Stock Now?

Core Viewpoint - Lam Research Corporation (LRCX) has experienced an 18.4% increase in share price over the past month, outperforming the broader Zacks Computer and Technology Sector, which gained 11% during the same period [1][2]. Group 1: Market Dynamics - The recent surge in Lam Research's stock is attributed to improved sentiment regarding U.S.-China trade relations, with a temporary tariff rollback where the U.S. reduced tariffs on Chinese imports from 145% to 30%, and China cut duties on U.S. goods from 125% to 10% for 90 days [2][3]. - This trade truce has revived hopes for smoother international trade, leading to a rally in equities, particularly in the tech and semiconductor sectors [3]. Group 2: Industry Performance - Other semiconductor companies, including NVIDIA, Broadcom, and Advanced Micro Devices, have also seen significant stock price increases, with NVIDIA up 24.3%, Broadcom up 23.4%, and AMD up 19.3% over the past month [4]. - The demand for artificial intelligence (AI) and datacenter chips is expected to support Lam Research's long-term growth, as the company provides critical technologies for advanced chip fabrication [5]. Group 3: Financial Performance - In the third quarter of fiscal 2025, Lam Research reported revenues of $4.72 billion, a 24.5% year-over-year increase, and a non-GAAP EPS increase of 33.5% [10]. - The company's non-GAAP operating margin rose to 32.8%, an increase of 210 basis points year over year, reflecting improved margins and efficiency [9]. Group 4: Strategic Positioning - Lam Research's investments in research and development, particularly its Cryo 3.0 technology and Aether dry-resist system, have provided a competitive edge and are gaining adoption in memory applications [8]. - The company's expansion in Asia has further enhanced its operational efficiency and market presence [9]. Group 5: Valuation Metrics - Despite the recent stock rally, Lam Research's forward price-to-earnings (P/E) ratio stands at 21.17, lower than the sector average of 25.72 and below major competitors like AMD, NVIDIA, and Broadcom [12][13]. - The discounted valuation aligns with the company's long-term growth potential, making it an attractive investment option [12][14].