Lam Research Nearly Triples in a Year: Is the Stock Still Worth Buying?

Lam Research Corporation LRCX has delivered an exceptional run over the past year, with its stock nearly tripling as strong AI-related semiconductor demand drives spending on chipmaking equipment.

LRCX has surged 192.8% over the past 12 months, easily outpacing the Zacks Electronics - Semiconductor industry’s 35.3% growth. The stock has also outperformed major industry peers, including Applied Materials, Inc. AMAT, Amkor Technology, Inc. AMKR and Broadcom Inc. AVGO, which have gained 180.6%, 92.4% and 3.6%, respectively, during the same period.

Lam Research One-Year Price Return performance

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Such a massive rally naturally raises an important question: Can Lam Research stock continue to move higher after such a strong run?

LRCX still has upside potential. The stock is more expensive than it was a year ago, but its earnings outlook, exposure to AI infrastructure and strong position in advanced semiconductor manufacturing provide enough support for further gains.

AI Chip Demand Keeps Lam Research on a Strong Growth Path

Lam Research is an important part of the semiconductor supply chain ecosystem. The company supplies advanced equipment used by leading chipmakers, including Taiwan Semiconductor Manufacturing and Samsung, to manufacture sophisticated semiconductors.

This puts LRCX in a favorable position as AI chip production expands. The development of increasingly powerful AI processors is driving demand for advanced packaging, high-bandwidth memory (HBM) and more complex chip designs. These technologies require advanced etch and deposition equipment, areas in which Lam Research has significant expertise.

The company is also investing in new technologies to strengthen its competitive position. Its ALTUS ALD system is designed to improve manufacturing efficiency through molybdenum-based deposition, while the Aether platform helps chipmakers produce smaller and denser chip structures.

Lam Research expects advanced packaging revenues to grow more than 70% in 2026 after strong growth in 2025. Emerging technologies such as backside power distribution and dry-resist processing could provide additional growth opportunities as chip designs become more complex.

The strength of customer demand is already visible in Lam Research's results. The company has generated more than $5 billion in revenues for five consecutive quarters, including a record $6.72 billion in the latest reported financial results for the fourth quarter of fiscal 2026. The top-line performance consistency is important. It suggests that LRCX's growth is being supported by actual semiconductor investment rather than simply by excitement around AI.

Strong Earnings and Margin Gains Strengthen LRCX’s Bull Case

Lam Research's latest financial results provide another reason to remain bullish. The company’s fourth-quarter fiscal 2026 revenues increased 30% year over year to $6.72 billion, beating the Zacks Consensus Estimate by 0.7%. Non-GAAP earnings jumped 37% to $1.82 per share, exceeding the consensus estimate by 7.7%.

Lam Research Corporation Price, Consensus and EPS Surprise

Lam Research Corporation price-consensus-eps-surprise-chart | Lam Research Corporation Quote

Even more encouraging was the improvement in profitability. Non-GAAP gross margin increased 170 basis points year over year to 35% in the fourth quarter. Better pricing, operating efficiencies, scale benefits and a favorable product mix helped drive the improvement.

Non-GAAP operating margin was even stronger, rising 400 basis points to 38.4%. Higher gross margins, an expanded manufacturing footprint in Asia and disciplined cost management all contributed to the gain. This shows the company is not only witnessing growth in revenues but also converting that growth into stronger earnings and better margins.

Wall Street also expects the momentum to continue. The Zacks Consensus Estimate projects fiscal 2027 and 2028 revenues to increase 48.4% and 17.3%, respectively. Earnings per share are expected to grow 60.6% in fiscal 2027 and another 21.6% in fiscal 2028, highlighting the company's attractive long-term earnings potential.

Lam Research's Premium Valuation Looks Justifiable

LRCX does trade at a premium. It currently carries a Value Score of D, reflecting its expensive valuation.

Based on forward 12-month earnings, LRCX trades at 31.72X, significantly above the industry average of 13.64X. While that premium may appear expensive at first, it reflects the company's strong earnings outlook, AI-driven growth opportunities and consistent execution.

Lam Research Forward 12-Month P/E Ratio

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It also trades above industry peers, including Amkor Technology, Broadcom and Applied Materials. Amkor Technology, Broadcom and Applied Materials currently trade at forward 12-month P/E multiples of 17.83, 19.91 and 26.22, respectively.

Conclusion: LRCX Stock Is Still Worth Buying

Lam Research's nearly 193% gain over the past year makes the stock look expensive. However, the strong rally does not automatically mean that LRCX has run out of upside.

The company remains deeply tied to some of the strongest trends in semiconductors, including AI chips, HBM and advanced packaging. These trends are translating into record revenues, stronger margins and rapid earnings growth.

So, Lam Research stock is still worth buying despite nearly tripling over the past year.

LRCX currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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