This Incredibly Cheap Semiconductor Stock Is About to Go on a Terrific Bull Run

5 hours ago 3

Harsh Chauhan, The Motley Fool

Thu, May 1, 2025, 1:50 AM 5 min read

Share prices of Lam Research (NASDAQ: LRCX) changeable up much than 6% pursuing the April 23 merchandise of its fiscal 2025 third-quarter net (for the 3 months ended March 30), driven by the company's stronger-than-expected results and guidance that constituent toward beardown request for its semiconductor manufacturing equipment.

So acold this year, the banal has been nether unit owed to its reliance connected China for a ample chunk of income and the turmoil caused by the ongoing tariff war. However, Lam's results and outlook bespeak that it is doing good contempt those challenges, acknowledgment to the robust request for its chipmaking instrumentality sparked by catalysts specified arsenic artificial quality (AI).

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Let's instrumentality a person look astatine the factors driving Lam's maturation and analyse wherefore this semiconductor banal is worthy buying manus implicit fist close now.

Lam Research reported 24% year-over-year maturation successful gross for the erstwhile quarter, portion its non-GAAP (generally accepted accounting principles) nett income grew astatine a faster gait of 30%. Lam absorption attributed the awesome maturation to the robust request for leading-edge foundry equipment, which is utilized successful manufacturing precocious chips deployed successful AI servers arsenic good arsenic smartphones and idiosyncratic computers (PCs).

Meanwhile, the beardown request for high-bandwidth representation (HBM) is turning retired to beryllium different tailwind for Lam's manufacturing equipment. That's not surprising, arsenic representation instrumentality accounts for 43% of Lam's full revenue, and representation manufacturers person been ramping up the output of HBM to conscionable request from chipmakers specified arsenic Nvidia and Advanced Micro Devices.

For instance, representation specializer Micron Technology expects the HBM manufacture to make $35 cardinal successful gross this year. That's higher than the $30 cardinal estimation Micron issued successful December past year. This upward revision successful the HBM market's maturation tin beryllium attributed to the increasing size of this representation benignant successful the latest AI graphics cards from AMD and Nvidia.

Nvidia's latest-generation Blackwell GPUs (graphics processing units) are packing 4 times the representation arsenic compared to the erstwhile procreation Hopper processors. Similarly, AMD has accrued the HBM capableness connected its MI325X AI GPU by 96 gigabytes (GB) implicit its erstwhile MI300X chip. As a result, it is casual to spot wherefore representation manufacturers specified arsenic Micron and Samsung are investing much wealth successful HBM capacity.