Lam Research Corporation (LRCX): A Bull Case Theory

We came across a bullish thesis on Lam Research Corporation on Rijnberk InvestInsights’s Substack by Daan | InvestInsights. In this article, we will summarize the bulls’ thesis on LRCX. Lam Research Corporation’s share was trading at $98.41 as of August 4^th. LRCX’s trailing and forward P/E were 23.22 and 21.46, respectively according to Yahoo Finance.

Lam Research (LRCX) stands as a quiet compounder in the semiconductor manufacturing equipment space, delivering exceptional long-term performance with financials rivaling the market’s most celebrated companies. Since 2013, Lam has achieved a 14% revenue CAGR and 24% EPS CAGR, while consistently generating an ROIC above 35% since 2019 and maintaining an industry-leading 29% FCF margin, translating to $5.4 billion in trailing free cash flow. The company returns 99% of FCF to shareholders through dividends—growing at a 14% CAGR for a decade—and massive buybacks that have reduced its share count by 65% since 2013.

Lam is the third-largest global supplier of semiconductor manufacturing equipment and the undisputed leader in etch, deposition, and wafer cleaning technologies—critical for advanced nodes, 3D architectures, gate-all-around transistors, and high-bandwidth memory. These areas are growing faster than the broader WFE market, positioning Lam to outpace peers amid the AI-driven complexity in chipmaking. Fiscal Q4 results reinforced this strength, with revenue up 34% YoY to $5.17 billion, gross margin reaching a record 50.3%, and EPS up 64% YoY, despite temporary Chinese-driven demand that may normalize later in 2025.

Management guides for low-to-mid double-digit revenue growth and high-teens EPS CAGR through 2028, supported by secular trends and continuous share gains. While shares have rallied 34% YTD to ~$96, trading at 22x FY26 earnings, Lam remains attractively valued relative to peers and its growth profile, with a PEG of 1.2x. With robust financial health, a capital-light model, and world-class execution, Lam is well-positioned to deliver strong compounding returns for the next decade.

Previously, we covered a bullish thesis on Lam Research Corporation (LRCX) by The Antifragile Investor in May 2025, which highlighted its strong moat, service-driven flywheel, and essential role in semiconductor manufacturing. The company’s stock price has appreciated approximately 19% since our coverage, as the thesis played out. The thesis still stands. Daan | InvestInsights shares a similar view but emphasizes Lam’s stellar Q4 and capital allocation strength.

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Disclosure: None.