#7 - Lam Research (NASDAQ:LRCX)
Lam Research Corp. (NASDAQ: LRCX) is a wafer fabrication company. That means it makes the equipment that chip makers need. Simply put, if chips are the tip of the spear when it comes to AI, companies like Lam Research are the sharp point.
LCRX has been on a heater, as the kids like to say. The stock is up 59% in the last 12 months and 27% in 2024. That has it trading at a price of over $1,035 per share with a forward P/E ratio of around 34x.
Investors may see that as too richly valued. However, the company announced a 10-for-1 stock split on May 21, 2024, which will go into effect on October 3, 2024. Is this a reason to get involved with the stock?
Stock splits don’t change the valuation of a company, but they can make the stock psychologically more attractive for investors. That may be why an analyst from Evercore initiated coverage of LRCX stock in April with a $1,200 price target.
About Lam Research
Lam Research Corporation designs, manufactures, markets, refurbishes, and services semiconductor processing equipment used in the fabrication of integrated circuits. The company offers ALTUS systems to deposit conformal films for tungsten metallization applications; SABRE electrochemical deposition products for copper interconnect transition that offers copper damascene manufacturing; SOLA ultraviolet thermal processing products for film treatments; and VECTOR plasma-enhanced CVD ALD products.
Read More - Current Price
- $82.86
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 14 Buy Ratings, 5 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $141.28 (70.5% Upside)
It's important for investors to get clarity around AI's significance. Many investors (possibly some who missed the generative AI catalyst) will say AI is a bubble that's bound to burst. Others are genuinely concerned about what the unregulated growth of AI may mean for society.
Those questions will be debated for years. In the meantime, the most important takeaway for investors is that AI isn't going away. Companies have invested too much in the technology, and even the most basic AI applications are the least impressive examples of what this technology can offer.
But you don't have to be concerned about whether AI is a friend or foe when investing in chip stocks today. The one thing you need to know is that billions of dollars are going into this space and that investment will show up in stock prices.
If you're not ready to invest in individual chip stocks right now, MarketBeat will provide real-time updates for any stock on your watchlists. Plus, there are several exchange-traded funds (ETFs) that invest in a basket of the top chip stocks.
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