Key insights
- Morgan Stanley upgraded Lam Research (LRCX) to Overweight, raising the price target to $331 based on a strong NAND outlook and projected share gains. The firm forecasts significant NAND systems growth, surpassing the 2021 peak. The upgrade reflects increased confidence in Lam Research's 2027 performance and applies a higher target multiple. This positive revision, coupled with upward earnings revisions from other analysts, suggests bullish sentiment towards LRCX and the semiconductor equipment sector.
Investing.com - Morgan Stanley upgraded Lam Research (NASDAQ:LRCX) to Overweight from Equalweight and raised its price target to $331 from $293. The stock currently trades at $284.72, with Wall Street analysts maintaining a consensus Buy rating and price targets ranging from $220 to $385.
The firm revised its calendar year 2027 forecast for Lam Research to $35.4 billion and $9.71 per share, up from $34.6 billion and $9.46 per share. The revision reflects a projection of 59% NAND systems growth, which would surpass the prior peak reached in 2021.
Morgan Stanley previously valued Lam Research at a 10% premium to Applied Materials to reflect confidence in Applied Materials’ 2026 share gains. The firm now raises that premium to 20%, slightly above the three-year average of 16%, based on confidence in Lam Research’s 2027 share gains.
The new valuation applies a 34-times target multiple, up from the previous multiple used in the $293 price target. The $331 price target implies 16% upside from current levels.
Morgan Stanley stated it had previously preferred DRAM wafer fabrication equipment exposure over NAND given relative revisions. The firm said the magnitude of its DRAM equipment revisions has narrowed and it is now more positive on NAND equipment revisions going forward.The upgrade comes as 24 analysts have revised their earnings upwards for the upcoming period, according to InvestingPro, which tracks over 20 additional exclusive tips for LRCX alongside comprehensive financial health metrics.
In other recent news, Lam Research has been in the spotlight following its fiscal third-quarter results, which surpassed both Stifel’s and consensus estimates. The company provided guidance for the fiscal fourth quarter ending in June, indicating surprising revenue growth and margins, exceeding its target model for calendar year 2028 and beyond. In response to these strong results, Stifel raised its price target for Lam Research to $325, maintaining a Buy rating. Similarly, TD Cowen increased its price target to $340, citing share gains in foundry and DRAM, along with potential growth in NAND wafer fabrication equipment spending.
Additionally, UBS reiterated a Buy rating on Lam Research, highlighting the company’s transition into an AI-driven growth cycle, akin to the growth seen in companies like Nvidia and Broadcom. Cantor Fitzgerald also reiterated an Overweight rating with a $320 price target, noting an increased outlook for wafer fabrication equipment to more than $140 billion by 2026. Meanwhile, shares of Lam Research, along with other U.S. chip equipment makers, faced a decline following reports of U.S. Department of Commerce restrictions on tool shipments to China’s Hua Hong. These developments reflect a dynamic period for Lam Research, with a mix of regulatory challenges and positive growth projections.
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