Key Stats for Lam Research Stock
- Past-Week Performance: -14%
- 52-Week Range: $56 to $252
- Valuation Model Target Price: $279
- Implied Upside: 31%
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What Happened?
Lam Research Corporation shares fell about 14% this week, ending near $213 per share, as a sharp midweek selloff drove most of the decline before shares stabilized into the close.
Last Wednesday, the stock dropped nearly 9% intraday to roughly $210 from a prior close near $230, with trading volume rising about 36% to roughly 19.5 million shares, signaling heavy selling and a rapid rotation out of semiconductor equipment stocks.
The stock moved lower last week primarily due to profit taking and positioning resets following a strong run, rather than company-specific negative news.
The surge in volume during the selloff points to institutional investors reducing exposure as valuation sensitivity increased across the sector and attention shifted toward earnings timing.
Company updates during the week reinforced Lam’s underlying fundamentals. The company recently reported record December-quarter revenue of $5.34 billion and full-year 2025 revenue of $20.6 billion, up 27% year over year, while guiding March-quarter revenue to about $5.7 billion and EPS to $1.35, reflecting continued momentum tied to AI-driven semiconductor demand.
CEO Tim Archer said that “the growth we envisioned for Lam at our investor event one year ago is materializing faster than we anticipated.”
By the end of the week, trading stabilized, with shares rising about 1.7% to around $213, though volume remained about 25% below average, suggesting selective buying rather than broad accumulation.
The board also approved a $0.26 quarterly cash dividend, while institutional activity remained mixed, with some funds trimming positions and others adding exposure, and institutional ownership holding near 85%.
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Is Lam Research Undervalued?
Under valuation assumptions, the stock is modeled using:
- Revenue Growth (CAGR): 18.3%
- Operating Margins: 35.5%
- Exit P/E Multiple: 29.0x
Lam Research’s revenue outlook reflects a business entering a cyclical upturn rather than a short-lived rebound, as semiconductor manufacturers increase capital spending to support AI accelerators, high-bandwidth memory, and more advanced logic nodes.
Growth is increasingly supported by Lam’s strength in advanced etch and deposition, where rising process complexity at gate-all-around transistors, backside power delivery, and 3D device structures drives higher tool intensity per wafer and expands Lam’s served available market.
This supports the view that future returns are driven less by unit volume alone and more by technology-driven share gains, richer system mix, and recurring services revenue tied to Lam’s expanding installed base.
Based on these inputs, the valuation model estimates a target price of $279, implying about 31% total upside over roughly 2.4 years, indicating the stock appears undervalued at current levels.
Results over the next year hinge on execution across several high-impact areas. Advanced packaging demand tied to AI workloads, continued momentum in high-bandwidth memory, and adoption of new etch platforms such as Akara support sustained revenue growth.
At the same time, margin discipline benefits from higher utilization, growing services and spares revenue, and operating leverage as customer spending recovers unevenly across segments.
At current levels, Lam Research appears undervalued, with future performance driven by technology leadership, expanding exposure to AI-driven semiconductor investment, and durable margin structure rather than short-term market sentiment.
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