Lam Research Corporation (NASDAQ:LRCX) is one of the 10 Stocks to Buy and Sell in 2025: Top Analyst Calls.
Lucas Downey from MoneyFlows talked about Lam Research Corporation (NASDAQ:LRCX) during a latest program on Schwab Network. He believes Lam Research is one of the top semiconductor stocks to buy on the dip.
“Semiconductors have been super hot, a name that I’ve owned for a number of years and continue to buy on dips, Lam Research. So, as AI continues to just gather steam and devices continue to get smaller, these are the types of companies that are going to win and they’re going to lead. Just last quarter back in April, they gave earnings. They set their expectations well above the street. Those are the types of companies you want to be betting on on any type of pullback. And we know semiconductors can get very volatile, especially heading into earnings.”
Appalaches Capital stated the following regarding Lam Research Corporation (NASDAQ:LRCX) in its Q1 2025 investor letter:
“We also initiated positions in ASML Holding N.V. (ASML) and Lam Research Corporation (NASDAQ:LRCX), companies that manufacture capital equipment for the semiconductor industry. You may be wondering if I have been “red-pilled” by A.I. after being so iconoclastic to the trend just a year ago. Not quite. Despite all of the attention being given to Artificial Intelligence, the rest of the semiconductor industry, like memory and trailing-edge nodes, has been recovering out of a cyclical trough. Semiconductor foundries have additionally announced large increases to their capital expenditure budgets, which flow directly into the backlogs of companies like ASML and Lam. After a long period of consolidation, both operate in a highly consolidated industry structure with little to no competition. Both companies have smart and disciplined capital allocation, returning most of their cash flows to shareholders through large repurchase programs. While not thought of as traditional value stocks (despite having healthy free cash flow yields), I have a very favorable view of the industry broadly.
In order to understand what these companies do, and why it is so difficult to compete with them, a quick look into a semiconductor fabrication facility (a “fab”) is necessary.
Fabs vary in size, but most modern facilities will be at least 250,000 square feet in production space, or around 6 acres. According to Intel, their fabs have 1,200 different tools laid out across the facility, each having a size that ranges from that of a small car to a school bus. These tools print, deposit, etch, clean, and inspect features that are only nanometers in size on a small disk of crystalline silicon, called a wafer. These silicon wafers travel from tool to tool in a sterilized container on an interconnected highway system of rails, intentionally and algorithmically laid out for maximum efficiency. A wafer will be transferred from machine-to-machine thousands of times over a period of three to four months before being completed; any interruption in the process significantly reduces the throughput of the fab and risks contaminating the highly delicate chip-structure with dust and other microscopic debris. The fabs themselves take three to five years to build and are designed around the dimensions of the tools being purchased. All of this is to say that once a tool is in the specifications of the facility, there is no replacing it with a competitor…” (Click here to read the full text)
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 time frame. If you are looking for an AI stock that is more promising than LRCX and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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