Jim Cramer’s Game Plan: 23 Stocks to Watch

4. Lam Research Corporation (NASDAQ:LRCX)

Number of Hedge Fund Holders: 84

Talking about how ASML’s poor forecast shook up the semiconductor industry, Cramer discussed Lam Research Corporation (NASDAQ:LRCX).

“… Now, Lam Research is a much better company than ASML. I think it’ll tell a good story. I think it’s got a healthy buyback. Very risky, though. If it’s just only because expectations have been lowered here, it might work. But the problem with Lam is, is that what happens if ASML is at all right, then Lam won’t pop. But that’s not that big a risk.”

Lam Research (NASDAQ:LRCX) designs, manufactures, markets, refurbishes, and services semiconductor processing equipment used in the production of integrated circuits. In its annual filing, the company identified Micron, Samsung, SK Hynix, and Taiwan Semiconductor Manufacturing as its primary customers, highlighting its strong ties within the semiconductor industry.

According to McKinsey & Company, global investments in semiconductor fabrication facilities are projected to reach around $1 trillion by 2030. Additionally, much of this investment is focused on Asia and the United States. During the August earnings conference call, CEO Timothy Archer discussed the potential growth driven by artificial intelligence applications.

As the use of AI expands, particularly with inferencing at the edge, there is an expected rise in demand for low-power DRAM and NAND storage in enterprise PCs and smartphones. This trend aligns with the company’s capabilities, suggesting that investments in AI-enabled edge devices will significantly benefit the company.

In May, Lam Research (NASDAQ:LRCX) announced a 10-for-1 stock split alongside a $10 billion share buyback program that adds to existing repurchase authorizations. It allows for repurchases in both public and private markets, including the use of derivative contracts and structured agreements, with no fixed termination date, although it may be suspended or discontinued at any time.