Time To Buy Lam Research Stock?

Lam Research (NASDAQ:LRCX) stock has seen a significant surge this year, climbing 22% and far outpacing the S&P 500’s modest 2% gain. This impressive performance is largely due to the company’s robust quarterly results, driven by strong foundry revenues and expanding margins. Given this recent rally, the key question for investors is whether LRCX remains an attractive buy. We believe it does. Despite its current price of around $90, we find minimal cause for concern with LRCX stock, especially considering its moderate valuation. Our conclusion is based on a comprehensive analysis of Lam Research’s operating performance over recent years, as well as its current and historical financial condition. We’ve evaluated the company across several key parameters: Growth, Profitability, Financial Stability, and Downturn Resilience. Our findings indicate that Lam Research exhibits very strong operating performance and financial health, making it an appealing investment opportunity. However, for investors who seek lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative — having outperformed the S&P 500 and generated returns exceeding 91% since its inception. Separately, see – ENPH Stock To Bounce Back?

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How Does Lam Research’s Valuation Look vs. The S&P 500?

Going by what you pay per dollar of sales or profit, LRCX stock looks slightly expensive compared to the broader market.

• Lam Research has a price-to-sales (P/S) ratio of 6.4 vs. a figure of 3.0 for the S&P 500
• Additionally, the company’s price-to-free cash flow (P/FCF) ratio is 24.4 compared to 20.5 for S&P 500
• And, it has a price-to-earnings (P/E) ratio of 23.5 vs. the benchmark’s 26.4

How Have Lam Research’s Revenues Grown Over Recent Years?

Lam Research’s Revenues have seen notable growth over recent years.

• Lam Research has seen its top line grow at an average rate of 2.8% over the last 3 years (vs. increase of 5.5% for S&P 500)
• Its revenues have grown 20.3% from $14 Bil to $17 Bil in the last 12 months (vs. growth of 5.5% for S&P 500)
• Also, its quarterly revenues grew 24.4% to $4.7 Bil in the most recent quarter from $3.8 Bil a year ago (vs. 4.8% improvement for S&P 500)

How Profitable Is Lam Research?

Lam Research’s profit margins are much higher than most companies in the Trefis coverage universe.

• Lam Research’s Operating Income over the last four quarters was $5.3 Bil, which represents a high Operating Margin of 30.8% (vs. 13.2% for S&P 500)
• Lam Research’s Operating Cash Flow (OCF) over this period was $4.5 Bil, pointing to a moderate OCF Margin of 26.2% (vs. 14.9% for S&P 500)
• For the last four-quarter period, Lam Research’s Net Income was $4.7 Bil – indicating a considerably high Net Income Margin of 27.2% (vs. 11.6% for S&P 500)

Does Lam Research Look Financially Stable?

Lam Research’s balance sheet looks very strong.

• Lam Research’s Debt figure was $4.5 Bil at the end of the most recent quarter, while its market capitalization is $113 Bil (as of 6/9/2025). This implies a very strong Debt-to-Equity Ratio of 4.1% (vs. 19.9% for S&P 500). [Note: A low Debt-to-Equity Ratio is desirable]
• Cash (including cash equivalents) makes up $5.5 Bil of the $20 Bil in Total Assets for Lam Research.  This yields a very strong Cash-to-Assets Ratio of 27.3% (vs. 13.8% for S&P 500)

How Resilient Is LRCX Stock During A Downturn?

LRCX stock has fared worse than the benchmark S&P 500 index during some of the recent downturns. Worried about the impact of a market crash on LRCX stock? Our dashboard How Low Can Lam Research Stock Go In A Market Crash? has a detailed analysis of how the stock performed during and after previous market crashes.

Inflation Shock (2022)

• LRCX stock fell 56.8% from a high of $72.98 on 14 January 2022 to $31.50 on 14 October 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 11 December 2023
• Since then, the stock has increased to a high of $112.73 on 10 July 2024 and currently trades at around $88

COVID-19 Pandemic (2020)

• LRCX stock fell 45.0% from a high of $34.16 on 13 February 2020 to $18.79 on 20 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 14 July 2020

Global Financial Crisis (2008)

• LRCX stock fell 75.0% from a high of $6.00 on 17 July 2007 to $1.50 on 19 November 2008, vs. a peak-to-trough decline of 56.8% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 23 May 2014

Putting All The Pieces Together: What It Means For LRCX Stock

In summary, Lam Research’s performance across the parameters detailed above are as follows:

• Growth: Very Strong
• Profitability: Very Strong
• Financial Stability: Extremely Strong
• Downturn Resilience: Weak
• Overall: Very Strong

Overall, Lam Research has demonstrated exceptional performance across the key parameters we analyzed. We believe this strong operational and financial health is not fully reflected in the stock’s current moderate valuation, making LRCX an attractive buy. This further supports our conclusion that Lam Research is a sound investment.

While LRCX stock looks promising, investing in a single stock can be risky. On the other hand, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics.

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