Is Lam Research Stock a Buy, Sell or Hold at a P/E Multiple of 18.78X?

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Lam Research Corporation LRCX, a leader in semiconductor fabrication equipment, currently trades at a forward 12-month price-to-earnings (P/E) ratio of 18.74, significantly lower than the Zacks Electronics – Semiconductors industry average of 27.63. LRCX stock’s P/E multiple is also lower than its peers in the semiconductor space, including ASML Holding ASML, Advanced Energy Industries AEIS and KLA Corporation KLAC.

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At present, ASML Holding, Advanced Energy Industries and KLA Corporation have a forward 12-month P/E ratio of 26.29, 24.21 and 19.61, respectively. This relatively lower valuation suggests that Lam stock could be undervalued, particularly considering its growth potential in artificial intelligence (AI) and high-performance computing (HPC) markets.

However, Lam Research has seen its stock price decline 10.4% year to date (YTD), underperforming the industry’s impressive 43.2% gain. This disparity raises a key question for investors: Is Lam Research stock a buy, sell or hold?

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A closer examination of the company’s fundamentals and market positioning suggests that holding the stock for now might be the most prudent choice.

LRCX’s Strong Start to FY25 Amid Macroeconomic Uncertainties

Lam Research’s first-quarter fiscal 2025 results, reported on Oct. 23, underscored its resilience amid challenging market conditions. Revenues grew 19.7% year over year to $4.17 billion, driven by robust demand in memory and logic markets. Non-GAAP earnings per share rose 28.4% to 86 cents and exceeded analyst expectations.

This strong start to fiscal 2025 reinforces Lam Research’s resilience in navigating an evolving semiconductor cycle. As demand grows for advanced nodes, LRCX’s specialized technology in etch and deposition tools for high-aspect-ratio structures positions it well to capitalize on this trend. Lam Research’s first-quarter results also highlight its effective cost management, which has enabled sustained profitability even amid fluctuating end-market demand.

The Zacks Consensus Estimates for fiscal 2025 and 2026 depict continued top and bottom-line growth for Lam Research.

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Innovation Drives Long-Term Growth for Lam Research

Lam Research’s investments in advanced technologies, such as high-aspect-ratio etch and deposition processes, position it well for future growth. These innovations are critical for producing advanced memory and logic chips, which are in high demand for emerging applications like AI and HPC.

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