Alright, let's talk about Lam Research (LRCX). Nvidia and Broadcom get all the AI glory, but quietly, LRCX is up 117% this year. A cool double what Broadcom did. The question is, can it keep running? Or is this just a flash in the pan?
The Pick-and-Shovel Play
Lam Research doesn’t make the fancy AI chips everyone's drooling over. They make the machines that make the chips. Think of it like this: during the gold rush, the guys selling shovels made a killing, regardless of who actually struck gold. That's Lam.
The article points to PwC estimating a $1.5 trillion spend on new chip fabrication facilities between 2024 and 2030. That's a lot of shovels. And Lam, according to their CEO Tim Archer, is positioned to capitalize, with AI-driven semiconductor equipment requirements playing "extremely well to Lam's product strengths."
Let's drill down into their recent numbers. Fiscal Q1 2026 (ended September 28th) showed a 27.5% year-over-year revenue increase, hitting $5.32 billion. Adjusted earnings per share jumped even higher, 46% to $1.26. Decent, but the market's always looking forward.
Guidance for the current quarter is forecasting $5.2 billion in revenue. That's a 19% improvement year-over-year. Earnings are projected to increase 26% to $1.15 per share. Here's where it gets interesting: Lam expects stronger growth in the second half of the fiscal year. Okay, but what kind of stronger? That's the multi-billion dollar question, isn't it?
Management estimates that every $100 billion of incremental data center investment expands Lam's addressable market by $8 billion. Upgrading existing facilities adds another $40 billion opportunity. The existing fabs conversion is key.
The Valuation Question
Here's where my skepticism kicks in. The article mentions Lam trading at 33 times forward earnings, in line with the Nasdaq-100. Sounds reasonable, right? But forward earnings are just estimates. What if those estimates are too low? Or, conversely, what if the market's already priced in this "stronger growth" and any hiccup sends the stock tumbling?
Also, let's look at Broadcom. The other article notes Broadcom needs to add $255 billion in value to cross the $2 trillion mark. And Tesla needs to add $482 billion. Those are huge numbers. Are those projections realistic, or just wishful thinking based on current market hype?
I've looked at hundreds of these filings, and this kind of aggressive growth projection always makes me raise an eyebrow.
A Reality Check on "Overlooked"
The title claims Lam is "overlooked." Is it, really? A 117% gain this year doesn't exactly scream "hidden gem." Maybe "less hyped" is more accurate. This Artificial Intelligence (AI) Chip Stock Has Crushed Nvidia and Broadcom This Year. It Can Still Soar Higher. Nvidia is the flashy sports car; Lam is the reliable truck hauling the materials to build the racetrack. Both are essential, but one gets more attention.
And here's the part of the report that I find genuinely puzzling: the article mentions Access to this page has been denied because we believe you are using automation tools to browse the website. It may happen as a result of the following: Javascript is disabled or blocked by an extension (ad blockers for example). Your browser does not support cookies. What does this have to do with Lam Research? I'm not sure.
So, What's the Real Story?
Lam Research is riding the AI wave, no doubt. The numbers are solid, and the future could be bright. But "overlooked"? I'm not buying it. The stock's already priced for significant growth, and any slip-up could be painful. It's a good company in a good sector, but temper your expectations. 117% gains aren't sustainable forever.
