Lam Research Earnings: The Memory Recovery Is Underway, but Shares Are Well Out of Reach

We maintain our $660 fair value estimate for shares of wide-moat Lam Research after it reported results toward the high end of management guidance in the December quarter. Lam’s results continue to reflect an ongoing cyclical recovery in chip equipment spending, particularly for memory chipmakers to which Lam is more heavily exposed. After Lam saw a more than 20% sales decline in calendar 2023, we expect a double-digit growth year for the firm in calendar 2024. We like Lam’s exposure to steep recoveries in memory chip spending but continue to see shares as overvalued. We believe shares have skyrocketed over the past couple of quarters over exuberance for a memory chip recovery and have now far exceeded our expectations for Lam’s business fundamentals in the future. We would encourage investors to wait for a better entry point on the stock.