Goldman Sachs analyst James Schneider has commenced coverage of Lam Research (LRCX, Financial), giving it a Buy rating and setting a price target of $115. The firm has offered a balanced perspective on the U.S. semiconductor capital equipment, storage, and foundry sectors. Schneider notes that the semiconductor capital equipment industry is experiencing a mid-cycle, characterized by both challenges and opportunities, leading to relatively stable revenue across the sector.
Goldman Sachs anticipates more potential downside risks than upside, projecting that stable revenue figures will persist until 2026. On a positive note, the firm views China more as an opportunity rather than a threat for these companies. Additionally, Goldman forecasts a recovery in the hard-disk-drive cycle, particularly in the NAND sector, with expectations of a rebound by 2026.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 27 analysts, the average target price for Lam Research Corp (LRCX, Financial) is $95.30 with a high estimate of $125.00 and a low estimate of $70.00. The average target implies an downside of 4.52% from the current price of $99.81. More detailed estimate data can be found on the Lam Research Corp (LRCX) Forecast page.
Based on the consensus recommendation from 32 brokerage firms, Lam Research Corp's (LRCX, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Lam Research Corp (LRCX, Financial) in one year is $77.74, suggesting a downside of 22.11% from the current price of $99.81. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Lam Research Corp (LRCX) Summary page.
LRCX Key Business Developments
Release Date: April 23, 2025
- Revenue: $4.72 billion for the March quarter, an 8% increase from the prior quarter.
- Gross Margin: 49%, the highest since the Novellus merger, up from 47.5% in the previous quarter.
- Operating Margin: 32.8%, up from 30.7% in the December quarter.
- Deferred Revenue: $2 billion, flat from the December quarter.
- Systems Revenue Composition: Memory 43%, Foundry 48%, Logic and Other 9%.
- Regional Revenue: China 31%, Taiwan and Korea each at 24%.
- Customer Support Business Group Revenue: Approximately $1.7 billion, 21% higher than the same period in 2024.
- Operating Expenses: $763 million, with R&D accounting for 70%.
- Non-GAAP Tax Rate: 13.3% for the March quarter.
- Capital Return: $347 million in share repurchases and $296 million in dividends.
- Cash and Short-term Investments: $5.5 billion at the end of the March quarter.
- Total Debt: $4.5 billion at quarter end.
- Inventory: $4.5 billion, with inventory turns at 2.2 times.
- Capital Expenditures: $288 million, including land purchase in India.
- Employee Headcount: Approximately 18,600, an increase of 300 from the prior quarter.
- Guidance for June 2025 Quarter: Revenue of $5 billion, gross margin of 49.5%, operating margin of 33.5%, and EPS of $1.20.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Lam Research Corp (LRCX, Financial) reported a record quarter for foundry revenues, demonstrating strong product momentum in leading-edge technology inflections.
- The company achieved the highest quarterly gross margin percentage since the Novellus merger, indicating successful operational efficiencies.
- Lam Research Corp (LRCX) is witnessing strong momentum in deposition and etch technologies, with significant wins in atomic layer deposition and conductor etch applications.
- The Customer Support Business Group (CSBG) saw record revenues in the upgrades business, driven by NAND technology conversions and active upgrades by key DRAM and foundry logic customers.
- Lam Research Corp (LRCX) is leading in virtual fabrication with new licensing agreements for its SEMulator3D platform, enhancing equipment performance and process optimization.
Negative Points
- The company is facing challenges due to tariffs and a dynamic global economic environment, which could impact future operations.
- Lam Research Corp (LRCX) experienced a decrease in memory systems revenue, with non-volatile memory and DRAM segments showing declines from the previous quarter.
- The logic and other systems revenue decreased, driven by reduced leading-edge spending.
- There is uncertainty regarding the sustainability of the current gross margin levels due to potential changes in customer mix and product mix.
- The company anticipates a first-half-weighted year, with potential revenue declines in the second half due to the loss of business from restricted Chinese customers.
