LRCX vs. TSM: Which Semiconductor Stock Is the Better Bet Right Now?

Core Insights - Lam Research Corporation (LRCX) and Taiwan Semiconductor Manufacturing Company (TSMC) are pivotal players in the global semiconductor ecosystem, with TSMC being the largest contract chipmaker and Lam Research providing essential equipment for chip production [1][2] Lam Research Performance - Lam Research is leveraging AI trends by producing tools necessary for manufacturing next-generation semiconductors, which are crucial for AI and cloud data centers [3][4] - In 2024, Lam Research's shipments for gate-all-around nodes and advanced packaging surpassed $1 billion, with expectations to triple to over $3 billion in 2025 [5] - The company reported revenues of $5.17 billion in Q4 of fiscal 2025, marking a 34% year-over-year increase, and a non-GAAP EPS of $1.33, reflecting a 64% increase [6] Taiwan Semiconductor Performance - TSMC maintains dominance in the semiconductor foundry space, having advanced to 3nm production and preparing for 2nm, which positions it well to meet rising AI chip demand [7] - AI-related revenues for TSMC tripled in 2024 and are projected to double again in 2025, with Q2 2025 revenues reaching $30.07 billion, a 44% year-over-year increase, and EPS rising 61% to $2.47 [8] Investment Outlook - Lam Research is viewed as a stronger investment option due to its steady growth profile, with earnings growth estimates of 8.7% and 10.9% for fiscal 2026 and 2027, respectively [12] - In contrast, TSMC's earnings growth is expected to slow, with projections of 39.6% and 13.3% for 2025 and 2026 [12] - Year-to-date, shares of Lam Research have surged 94.3%, compared to TSMC's 49.5% increase [15] - Lam Research trades at 30.31 times forward earnings, while TSMC trades at 27.13 times, with the premium for Lam justified by its positive earnings momentum [16] Conclusion - Overall, Lam Research appears to be the better investment choice currently, benefiting from AI trends with fewer associated risks compared to TSMC, which faces geopolitical tensions and higher capital spending [19][20]