Analyst Note
| Abhinav Davuluri |Wide-moat Lam Research reported fiscal second-quarter results in line with our expectations, with strong year-over-year growth in logic, foundry, and NAND equipment sales. However, management expects calendar 2023 wafer fab equipment, or WFE, spending to be down over 20% year over year due to sharply lower memory capital expenditure, export restrictions to China, and overall weaker chip demand following the COVID-19-induced boom and amid broad macroeconomic headwinds. This outlook is consistent with our model, as we anticipate Lam’s next several quarters to be challenging. We are maintaining our fair value estimate of $620 per share, as we expect Lam to return to healthy growth in calendar 2024. While we believe prospective investors should find current levels attractive, we think the market will continue to punish Lam until its memory customers show signs of more normalized inventory levels and improving end-market demand.