## Lam Research (LRCX) Stock: Analyst Upgrades Despite China Concerns, NAND Growth Remains a Key Driver
Lam Research (LRCX) stock is on the rise, buoyed by positive analyst sentiment despite lingering concerns surrounding the Chinese semiconductor market. BofA Securities analyst Vivek Arya reiterated a Buy rating on the stock, raising his price forecast to $92 from $88. He cites Lam Research’s strong position in key tech trends, particularly its exposure to the recovering NAND market, and its solid free cash flow generation as reasons for optimism.
While acknowledging the ongoing risks associated with China’s export controls and the potential for a limited impact on gross and operating margins, Arya remains bullish on Lam Research’s prospects. He predicts that China’s contribution to the company’s revenue mix will normalize to 30% by December, and he’s raised earnings estimates for 2025 and 2026 by 4% and 7%, respectively.
Arya believes that Lam Research’s unique portfolio will help it outperform competitors in 2025, despite concerns about ASML Holding N.V.’s recent sales outlook. He notes that recent high shipments of lithography tools to China might trigger a correction in that market, but Lam Research is less affected due to its strength in advanced technologies like NAND and packaging.
Goldman Sachs analyst Toshiya Hari also maintained a Buy rating on Lam Research, although he lowered his price target to $96 from $102.50. Hari emphasizes the increasing demand for etching and deposition driven by advancements in NAND, leading-edge foundry/logic, and DRAM. This will enable Lam Research to gain market share in wafer fabrication equipment (WFE) in 2025 and beyond.
While ASML lowered its 2025 revenue guidance due to weak demand in leading-edge foundry and potential declines in Chinese spending, Lam Research maintained its forecast of a mid-$90 billion WFE market for 2024. In fact, Lam Research expects WFE spending to grow in 2025, driven by changes in NAND technology and ongoing strength in DRAM, HBM, and leading-edge foundry sectors.
Hari adds that Advanced Packaging, essential for AI technology, will further boost Lam Research’s performance. He also notes that China’s share of Lam Research’s total revenue decreased to 37% in the September quarter from 42% in the March quarter and 39% in the June quarter. Hari believes the market will view this decline positively, as it typically assigns a lower multiple to revenue streams generated in China.
The market’s response to this news has been positive, with LRCX shares trading higher by 4.87% to $76.41 at last check Thursday. Lam Research’s continued focus on advanced technologies, particularly NAND, and its ability to navigate the complexities of the Chinese semiconductor market, appears to be fueling investor confidence.