Lam Research (LRCX) Stock Forecast & Price Target

Lam Research's outlook is bolstered by a strategic increase in its valuation multiple to 26x, reflecting strong momentum in revisions to its financial expectations. The company's service segment is projected to experience significant growth, expected to reach 1.5 times from 2024 levels, with potential to double when the semiconductor industry achieves $1 trillion in revenues by 2028. Furthermore, Lam's market share in the global wafer fabrication equipment (WFE) sector has increased to approximately 15%, indicating a strong growth trajectory and robust gross margins of 50.6% despite adverse tariff impacts.

The financial outlook for Lam Research is negatively impacted by a guidance reduction for revenue, particularly due to a projected decline in sales from China, which is expected to drop from 43% to below 30% of total sales by CY26. Additionally, the company's gross margins are anticipated to decrease to 48.5% as a result of a less favorable customer mix and the anticipated effects of the US government's "50% rule," which is projected to result in a $600 million decline in sales for CY26. Furthermore, Lam Research is facing near-term headwinds from tariff-related issues and a weakening customer base in China, compounding the forecast of a more significant revenue decline compared to industry peers.