Lam Research (LRCX) Stock Forecast & Price Target

Lam Research is poised for ongoing growth, evidenced by an increase in its valuation multiple to 26x, reflecting the positive revisions in its financial outlook. The company anticipates substantial growth in its services segment, projecting a 1.5x increase from CY24 levels and potentially doubling when the semiconductor industry reaches $1 trillion in revenues by CY28. Additionally, Lam has expanded its global wafer fabrication equipment market share from approximately 10% a decade ago to around 15% recently, demonstrating its robust position and potential for continued expansion in the semiconductor market.

The outlook for Lam Research's stock is negative, primarily due to anticipated revenue declines stemming from the implementation of the new US government "50% rule," which is projected to impact sales by $600 million in calendar year 2026. Additionally, the company's gross margins are expected to decrease to 48.5% as a result of a less favorable customer mix, with the contribution from China decreasing significantly from 43% to an estimated 35% of sales. Furthermore, weakened domestic customer spending in China is expected to lead to a greater revenue decline for Lam compared to its peers, as the company's dependency on memory chipmakers makes it more vulnerable to these shifts in market dynamics.