Lam Research Earnings: We Modestly Lift Our Memory Equipment Forecast and Valuation

We modestly raise our fair value estimate for shares of wide-moat Lam Research to $680 per share from $660, due to a higher forecast for Lam’s sales of equipment into memory chipmakers in the medium term. Lam’s March-quarter results met our expectations, and its June-quarter guidance met our above-consensus estimates. We continue to expect strong growth from rebounding memory markets and leading-edge logic chip equipment in calendar 2024. Lam’s sales into China held up better than we expected. However, we continue to expect these to decline over coming quarters as customers digest big orders from the past year. We still view shares as overvalued. While we expect strong growth for Lam over the next two years, we believe longer-term results will remain cyclical.