Lam Research Stock Trades at Low P/E: Should You Buy, Sell or Hold?

Core Insights - Lam Research Corporation (LRCX) is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 22.32, which is significantly lower than the Zacks Electronics – Semiconductors industry average of 32.9 [1][4] - The lower valuation suggests that Lam Research stock could be undervalued, especially considering its growth potential in artificial intelligence (AI) and high-performance computing (HPC) markets [5] - LRCX shares have increased by 37.3% year to date (YTD), outperforming the industry's gain of 14.6% [6] Financial Performance - In Q4 2025, Lam Research reported revenues of $5.17 billion, a 34% increase year over year, with non-GAAP EPS surging 64% [11][8] - The company's non-GAAP operating margin rose to 34.4%, up 370 basis points from the previous year [12] - Approximately 34% of Lam Research's revenues were generated in China, down from 42% in the previous fiscal year, amid trade tensions and export curbs [14][8] Growth Drivers - Lam Research is benefiting from shifts in semiconductor demand, particularly in AI and data center chips, which require complex manufacturing tools [9] - Shipments for gate-all-around nodes and advanced packaging exceeded $1 billion in 2024, with expectations to triple to over $3 billion in 2025 [10] - The company's expansion of manufacturing operations in Asia has helped lower costs and improve margins [12] Challenges - Near-term challenges include potential escalating U.S.-China trade tensions that could impact sales in China [13] - The cyclical nature of the semiconductor market poses risks to revenue consistency, with NAND pricing pressures and cautious capital spending among clients [14] - Lam Research's reliance on memory and logic segments makes it vulnerable to cyclical downturns, although a rebound in memory spending is projected by late 2025 [15] Investment Outlook - Lam Research's attractive valuation and strong focus on high-growth markets make it a compelling long-term investment [17] - Despite near-term headwinds, the company's innovation and operational efficiency provide a solid foundation for future growth [17] - Holding LRCX stock is considered a prudent strategy for investors at this time [17]