Lam Research Corporation (LRCX): A Bull Case Theory

We came across a bullish thesis on Lam Research Corporation (LRCX) on Substack by The Antifragile Investor. In this article, we will summarize the bulls’ thesis on LRCX. Lam Research Corporation (LRCX)’s share was trading at $82.79 as of 21^st May. LRCX’s trailing and forward P/E were 23.06 and 19.01 respectively according to Yahoo Finance.

Lam Research has emerged as an indispensable player in the semiconductor ecosystem, quietly powering the atomic-level processes—etching, deposition, and cleaning—that enable the most advanced chips in the world. These tools are not interchangeable; they are engineered for ultra-precise tasks that, once integrated into fabs, become irreplaceable due to high switching costs and time-to-yield sensitivities. With platforms like Kiyo, Altus, and DV-Prime supporting logic, memory, and 3D NAND production, Lam’s tools are deeply embedded across global chipmakers including TSMC, Samsung, and Micron. More than just a hardware supplier, Lam has transformed into a high-margin service powerhouse.

Services like parts, upgrades, and productivity solutions now account for over 40% of revenue and carry significantly higher margins, lifting gross profit to an impressive 47.3% despite broader industry headwinds. These recurring revenues expand naturally as the installed base grows, creating a self-reinforcing flywheel. The company’s dominance is further cemented by a fortress of moats: thousands of patents, heavy R&D investment ($1.9B in 2023), a vast global support network, and near-impossible switching costs.

Even geopolitical risks underscore Lam’s value, as 42% of sales now come from China—despite export controls—highlighting just how essential its tools are to domestic fabs. Beyond the technology, Lam thrives because every leap in chip complexity demands more tools per wafer, ensuring its relevance grows with every innovation wave from AI to cloud computing. Investors often overlook Lam’s embedded software, service flywheel, and strategic positioning—but those who understand its quiet control over semiconductor manufacturing see a company compounding strength in the background of the digital world.

Lam Research Corporation (LRCX) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 84 hedge fund portfolios held LRCX at the end of the fourth quarter which was 58 in the previous quarter. While we acknowledge the risk and potential of LRCX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than LRCX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.