Should You Buy, Sell or Hold Lam Research Stock Before Q1 Earnings?

Lam Research Corporation LRCX is scheduled to release its first-quarter fiscal 2025 results on Oct 23.For the first quarter of fiscal 2025, the company expects revenues of $4.05 billion (+/- $300 million). The Zacks Consensus Estimate is pegged at $4.05 billion, indicating 16.3% growth from the figure reported in the year-ago quarter.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.The consensus mark for earnings is pegged at 80 cents per share, indicating growth of 15.9% from the figure reported in the year-ago quarter. The earnings figure has been unchanged over the past 60 days.Image Source: Zacks Investment ResearchLam Research has an impressive earnings surprise history. In the last reported quarter, the company delivered an earnings surprise of 8.2%. The company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 8.7%.Lam Research Corporation Price and EPS Surprise Lam Research Corporation price-eps-surprise | Lam Research Corporation QuoteEarnings Whispers for LRCXOur proven model does not conclusively predict an earnings beat for Lam Research this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.Though LRCX carries a Zacks Rank #3, it has an Earnings ESP of -0.06% at present. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.Factors Influencing LRCX’s Quarterly PerformanceLam Research has been riding the wave of a strong rebound in the semiconductor industry, driven by surging demand for memory and advanced artificial intelligence (AI) applications. The rise in spending on AI and machine learning, particularly with the growing influence of Generative AI, is likely to have provided a significant boost to the company's performance in the fiscal first quarter. The increasing need for advanced AI-centric chips has become a key growth catalyst.Heightened dynamic random access memory (DRAM) spending, especially in response to demand for high-bandwidth memory, is likely to have played in Lam Research's favor. The company's momentum in 3D DRAM and advanced packaging technologies is also expected to have added to its strong performance. At the same time, ongoing technological advancements are pushing NAND spending higher, which is likely to contribute to Lam’s quarterly results.Lam Research’s focus on expanding semiconductor fabrication capabilities, along with its heavy investment in research and development, positions it well in a competitive landscape. Its innovation through Semiverse solutions, particularly in high-aspect-ratio memory hole etch for NAND, is likely to have fueled this progress. LRCX’s strategic investments in cutting-edge technologies are likely to have bolstered its performance in the foundry and logic segment, while the increasing adoption of 3D architectures is expected to have supported growth in its etch and deposition services.The company’s robust suite of tools, which enable foundry logic inflections, is likely to have secured strong customer traction. With the accelerating deployment of 5G and the Internet of Things (IoT), Lam Research’s semiconductor and memory solutions remain in high demand, reinforcing its market position in the fiscal first quarter.All these factors are likely to have driven growth in system revenues. The Zacks Consensus Estimate forecasts fiscal first-quarter system revenues at $2.49 billion, implying year-over-year growth of 21.3%, underscoring Lam Research’s continued strength in the evolving tech landscape.LRCX Stock Price Performance & ValuationLam Research shares have underperformed the Zacks Semiconductor Equipment - Wafer Fabrication industry as well as the broader tech sector in the year-to-date period. The stock has also underperformed its peers, including ASML Holding ASML, Advanced Energy Industries AEIS and Applied Materials AMAT.YTD Price Return PerformanceImage Source: Zacks Investment ResearchLet us look at the value Lam Research offers investors at current levels. Currently, LRCX is trading at a discount, with a forward 12-month P/E of 20.56X compared with the industry’s 23.3X and lower than the one-year median of 26.00X, reflecting a good opportunity for investors. The stock also trades at lower multiples against its peers, including ASML Holding and Advanced Energy Industries, which have a forward 12-month P/E of 27.41X and 23.33X, respectively. However, it trades slightly above Applied Material’s 19.59X multiple.Image Source: Zacks Investment ResearchInvestment Thesis for Lam Research StockLam Research’s leading position in the recovering semiconductor industry makes it an attractive investment option. The company's expertise in key areas like deposition, etch, nanoscale applications and advanced systems engineering sets it apart in a highly competitive market. These core strengths, especially in critical technologies such as plasma, fluidics and chemistry, solidify its edge in the rapidly evolving tech landscape.The rising adoption of AI, increased focus on localized semiconductor production, and the expanding role of semiconductors in both consumer and commercial products provide Lam Research with strong long-term growth opportunities. As demand for chips continues to surge globally, Lam’s market position enables it to capture these trends.The gradual rebound in memory spending is promising for wafer fabrication equipment demand, a key driver of Lam Research’s revenues. This recovery trend should contribute to the company’s top-line growth over the long term.However, rising geopolitical tensions between the United States and China, particularly with the U.S. Department of Commerce imposing export restrictions on Chinese chip companies, create uncertainty for Lam Research’s future. The broader global economic challenges and the potential fallout from ongoing geopolitical conflicts are major risks that could weigh on the company’s outlook.Conclusion: Hold LRCX Stock for NowGiven Lam Research's solid positioning in the semiconductor industry and strengths in critical technologies like deposition and etch, the company is well-equipped to capitalize on long-term growth drivers such as AI, increased semiconductor demand and expanding chip manufacturing. However, near-term risks like U.S.-China geopolitical tensions and macroeconomic uncertainties could pose challenges.While Lam Research’s fundamentals remain strong, these external factors introduce volatility. It would be prudent for investors to hold the stock for now, keeping an eye on how these risks unfold before making further moves.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ASML Holding N.V. (ASML): Free Stock Analysis Report Lam Research Corporation (LRCX): Free Stock Analysis Report Applied Materials, Inc. (AMAT): Free Stock Analysis Report Advanced Energy Industries, Inc. (AEIS): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks