2 Reasons to Buy Into Lam’s 185% Rally, 1 Reason to Run Away

Core Viewpoint - Lam Research Corp. has experienced a significant 185% rally in its stock price since April 2025, driven by strong demand in the semiconductor industry, robust earnings, and positive analyst ratings [1][2]. Group 1: Reasons to Buy - Strong Fundamentals: Lam Research has consistently exceeded analyst expectations, with Q3 earnings showing over 27% year-over-year revenue growth, primarily due to increased demand for memory equipment and a favorable product mix [3][4]. - Analyst Support: Analysts are overwhelmingly positive about Lam's prospects, with multiple firms reiterating Buy ratings and some projecting up to 25% additional gains from current stock levels [5][6][7]. - Valuation Comfort: Despite the significant price increase, Lam's price-to-earnings ratio remains around 35, suggesting the stock may still be undervalued relative to its growth potential [8]. Group 2: Reason to Stay Away - Potential Overvaluation: There are concerns that the stock may have risen too quickly, as technical indicators show it was previously in overbought territory, with the relative strength index (RSI) reaching above 80 [9][10].