Lam Research (LRCX) Stock Forecast & Price Target

Lam Research is projected to experience significant revenue growth in the coming years, particularly in its Gate-All-Around (GAA) and Advanced Packaging (AP) segments, with expectations of surpassing $3 billion in combined revenues by CY25. The company's unique position in the semiconductor fabrication equipment market is highlighted by a robust 180% revenue growth in its Customer Support Business Group (CSBG) since CY13, with a further anticipated growth of 50% by CY28, translating to a compound annual growth rate (CAGR) of approximately 10%. Additionally, Lam Research has successfully enhanced its gross margins through operational improvements in its Malaysian facility, contributing positively to overall profitability and positioning the company favorably for increased market share in the wafer fabrication equipment sector.

The financial analysis reveals a negative outlook for Lam Research due to its underperformance relative to revenue targets, particularly marked by a significant shortfall in NAND spending, which dropped from a peak of $18 billion in 2022 to approximately $7-8 billion in 2023-2024. The company's share of wafer fabrication equipment (WFE) at 16.2% was notably lower than its guidance of 23.5%-25.0%, resulting in 2024 revenues of $16.2 billion that fell below the target model's low end of $16.5 billion. Additionally, while free cash flow margins are strong, the reported EPS of $3.36 was below the expected range of $3.50-$3.70, primarily due to revenue misses and increased R&D spending, raising concerns about the sustainability of growth amid fluctuating market conditions.