Lam Research Corp

Lam Research Corp continues to benefit from AI-driven demand, prompting semiconductor manufacturers to expand capacity. This has led to elevated wafer fabrication equipment spending, which is crucial for the company's growth. The improved visibility into AI-related semiconductor capital spending, combined with stronger forecasts for wafer fabrication equipment, supports the positive outlook for Lam Research. The company is well-positioned in a sector that is experiencing high-teens year-over-year growth, indicating a strong market presence and potential for future earnings.

Lam Research reported record results that came in better than expected, as did the company's quarterly outlook. Management raised its forecast for the 2026 Wafer Fab Equipment industry from $135 billion to $140 billion, a strong upward revision that signals the capital expenditure cycle supporting AI compute has significant duration ahead of it. Shares of Applied Materials advanced alongside Lam Research, as investors extrapolated the strength of the Wafer Fab Equipment demand environment across the equipment complex, with the company's leading positions in deposition, etch and transistor-processing tools positioning it as a direct beneficiary of the same AI-driven foundry and memory-investment cycle.

Lam Research has demonstrated strong performance, with a return of 65.2% in the second quarter. The company is positioned well within the semiconductor industry, benefiting from the ongoing AI infrastructure trade. The manager emphasizes the importance of maintaining concentrated positions in businesses with a high probability of compounding economic value, and Lam Research fits this criterion due to its durable secular tailwinds and advantaged business model. The investment discipline remains focused on long-term wealth creation, which aligns with Lam Research's growth potential.

Lam Research is positioned to benefit significantly from the ongoing AI infrastructure build-out, which is driving hyperscalers to invest heavily in capacity and cutting-edge technologies. The company specializes in etch and deposition processes, which are critical as chipmakers require greater volumes of increasingly complex chips. Despite recent stock performance challenges, the long-term demand for semiconductor equipment remains robust, supported by strong capital expenditure plans in the semiconductor industry. This positions Lam Research as a key player in a growing market.

Lam Research (LRCX) was a large contributor to our portfolio performance, reporting solid first quarter operating results and offering an upbeat outlook for wafer fab equipment growth in 2026, driven by AI tailwinds. The company's growth forecast has increased due to AI-driven demand, increasing chip complexity, and a continued shortage of memory chips. We believe that the favorable backdrop for semiconductor equipment stocks, fueled by investor enthusiasm for high-growth, momentum stocks with direct exposure to AI, will continue to benefit Lam Research.

Lam Research Corporation has been a strong contributor to our portfolio, benefiting from increased capital spending on semiconductor production. The demand for wafer fabrication equipment remains robust, driven by AI compute demand for datacenters and AI applications. We believe that Lam Research is well positioned to capitalize on this trend, as evidenced by its significant contribution of 420 basis points to our composite, reflecting a 103% stock total return. This positions Lam Research as a key player in the ongoing AI infrastructure buildout.

The Fund's allocation to Lam Research Corporation, a semiconductor processing equipment company, has contributed positively to performance. The manager emphasizes the importance of investing in companies with durable competitive advantages and strong cash flows, which aligns with Lam Research's profile. The outlook for innovation in semiconductors, particularly in relation to AI, suggests a favorable environment for Lam Research's growth. The manager's confidence in Lam Research is reflected in the decision to increase the position.

Lam Research (LRCX) was also a large contributor. The company reported solid first quarter operating results while offering an upbeat outlook for wafer fab equipment growth in 2026, driven by AI tailwinds. Semiconductor equipment stocks, in general, benefited from investor enthusiasm for high-growth, momentum stocks with direct exposure to AI. In addition, the company’s most recent operating results saw an increase in its growth forecast driven by AI tailwinds, increasing chip complexity, and a continued shortage of memory chips.

Lam Research was a top performer in May, significantly contributing to the fund's performance. The manager notes that the hype surrounding Lam Research is somewhat exaggerated, yet they still see value in the company. The combination of its role as a supplier in the semiconductor industry and the ongoing demand for advanced technologies positions Lam Research favorably. The manager's confidence in the company's future is reflected in their decision to increase their position.

Lam Research Corp (LRCX) was one of our strongest performers this quarter, and we continue to hold this position, actively buying it back if called away, as we still view it as having attractive value relative to peers. The AI investment theme remains powerful, and we believe that Lam Research is well positioned to take advantage of current market conditions, especially with the ongoing scrutiny of returns on capital being deployed in AI infrastructure.