Lam Research (LRCX) Stock Forecast & Price Target

Lam Research maintains a positive financial outlook, with expectations for service revenue to grow 1.5 times from CY24 levels and potentially double when the semiconductor industry reaches $1 trillion in revenues by CY28. The company's strong market presence, particularly in etch and its significant share in deposition, positions it to benefit from ongoing expansion in the semiconductor market, particularly through advancements like CFET (sub 1nm) technology. Additionally, Lam's emphasis on enhancing customer utilization and yield through its innovative solutions is anticipated to contribute to sustained growth and competitive advantage in the industry.

Lam Research has recently tempered expectations for the December quarter due to incremental tariff-related headwinds and a worsening customer mix, particularly citing lower domestic demand from China, which may negatively impact gross margins. Although operating margins reached an all-time high in June, the company faces a digital transformation headwind that is expected to continue influencing profitability negatively until around CY28. The reliance on memory chipmakers for DRAM and NAND production increases vulnerability to market fluctuations, further contributing to a cautious outlook on the company's financial performance.