Lam Research (LRCX) Stock Forecast & Price Target

Lam Research's positive outlook is bolstered by an adjustment in valuation multiple from 24x to 26x, reflecting strong momentum in the company's financial revisions. The company’s service segment is projected to grow significantly, with expectations of 1.5 times growth from CY24 levels and a potential doubling as the semiconductor industry is anticipated to reach $1 trillion in revenues by CY28. Additionally, Lam Research has successfully expanded its global wafer fabrication equipment market share from approximately 10% to 15% over the past decade, supported by impressive gross margins of 50.6% and continued potential for growth through technology advancements in sub-1nm scales.

The financial outlook for Lam Research appears negative due to anticipated declines in revenue, particularly from the Chinese market, which is projected to drop to less than 30% of total sales by CY26, largely influenced by the new US government export "50% rule." Gross margins are also expected to decrease to 48.5%, driven by a less favorable customer mix as the proportion of sales from China diminishes from 43% to an estimated 35%. Furthermore, the guidance for lower sales in C4Q25 and incremental tariff-related headwinds suggest that Lam may experience a larger revenue decline compared to its peers, exacerbating concerns over its financial performance in the near term.