Up 33% YTD, This Stock Doesn’t Make Headlines, But Investors Keep Buying
While most of the spotlight in the AI-driven market goes to chip designers, a quieter player has been slowly climbing the charts. Lam Research (LRCX), a key supplier of semiconductor manufacturing equipment, is up nearly 33% year-to-date (YTD), outperforming the S&P 500 Index’s ($SPX) fall of 5%. Despite that strong performance, it hasn’t received the same attention as many high-end semiconductor names
Lam Research may be working behind the scenes. But its role in the semiconductor ecosystem, especially in memory chips, puts it at the center of the market’s strongest growth trends. And Micron’s (MU) recent gains help explain why LRCX stock continues to rise.
Lam’s research works at a critical point in the semiconductor value chain. Instead of designing the chips, it provides the equipment used to make them, especially the mounting and installation tools, which are essential for the production of advanced chips. Lam’s business is tied to memory manufacturers. That exposure seems to be a big advantage right now, as memory – especially high-bandwidth memory (HBM) – has become the backbone of AI infrastructure.
Lam’s income has grown at a healthy pace over the past five years, outpacing many peers. For the full year 2025, Lam reported 27% year-over-year (YOY) growth in revenue to $20.6 billion. The company has been translating top-line growth into faster earnings growth. Full-year EPS rose 49% YOY to $4.89, with a record net margin of 49.9%. Lam continued its strong momentum for the latest December quarter (Q2 fiscal 2026). Revenue reached $5.34 billion, marking the 10th consecutive quarter of revenue growth.
Turning to the performance of its segment, foundry revenue accounted for 59% of program revenue in the quarter, highlighting the shift to foundry demand, fueled by advanced investment and continued spending in mature areas, especially China. Meanwhile, memory revenue accounted for 34%. Within memory, DRAM capabilities stand out, supported by investments in HBM and node switching. Notably, DRAM revenue rose to 23%, while NAND was 11%. Management emphasized that the demand for advanced packaging, especially for HBM, is increasing. Lam expects his advanced packaging business to grow more than 40% by 2026, outpacing overall industry growth.
This is where Micron comes in.
Micron is a key customer of Lam Research. The company reported Q2 2026 earnings on March 18. Micron outlined an aggressive growth plan, with spending likely to exceed $25 billion this fiscal year and even higher in fiscal 2027. Much of this is due to the expected increase in equipment usage.
That’s where Lam comes in. When memory manufacturers increase capacity, they don’t just build fabrics. They also complement them with highly specialized equipment such as etching and deposition equipment, provided by companies such as Lam Research. Micron also highlighted that the DRAM and NAND markets remain under pressure due to high demand and tight supply. This often forces chip makers to invest even more heavily in the manufacturing process. Micron is also ramping up next-generation HBM production, which will increase demand for the devices and help Lam Research.
In fact, industry projections show that the HBM market alone could rise at a compound annual growth rate (CAGR) of 28.4% between 2025 and 2033 to reach $64.8 billion, underscoring the need for continued infrastructure development.
The market for semiconductor devices is growing rapidly, and Lam is taking a large share. Management expects wafer fabrication equipment (WFE) spending to reach $110 billion by 2025 and $135 billion by 2026. In addition, Lam is also expanding its available market (SAM) by aligning its portfolio with next-generation technologies. The company specializes in the production of DRAM, lead-edge Foundry logic, and NAND and storage. That said, investors should also keep in mind that the semiconductor industry is cyclical, where performance can be highly volatile.
Financially, Lam Research remains in a healthy position with the flexibility to repay future debt maturities. At the end of the December quarter, it had cash and equivalents worth $6.2 billion. It also returned 85% of free cash flow to shareholders through stock dividends and share buybacks. Lam expects to continue this trend of returns to shareholders.
Analysts expect Lam’s earnings to increase 28% in fiscal 2026, followed by 30% growth in fiscal 2027. Currently, LRCX stock trades at 42.8 times forward earnings, indicating investor enthusiasm for its long-term prospects.
Wall Street recognized Lam’s value, giving LRCX stock a “Strong Buy” rating consensus. Of the 32 analysts covering the stock, 23 have assigned a “Strong Buy” rating, three have a “Neutral Buy,” and six have assigned a “Hold” rating.
LRCX stock’s gains so far this year indicate that the company is benefiting from both cyclical recovery and structural improvement. Analysts believe the momentum will continue. Based on the average target price of $279.87, shares could rise 23% from current levels. The Street-high estimate of $325 means shares could rise 43% over the next 12 months.
While much of the market’s attention remains focused on headline stocks, Lam Research deserves a second look. LRCX stock may not be the most talked about AI stock, but the market is starting to recognize its role. As the semiconductor industry ramps up investment to meet the demands of the AI era, Lam Research is positioned to succeed.
As of the date of publication, Sushree Mohanty did not have (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. This article was originally published on Barchart.com
