Why Lam Research Outpaced Market With 40% Gain In 2025

Semiconductor manufacturing equipment giant Lam Research LRCX has seen its stock surge a remarkable 40% year-to-date, significantly outperforming the Nasdaq 100 index’s nearly 9% gain.

This ascent is largely propelled by the rapidly expanding artificial intelligence (AI) and data center boom, which is driving unprecedented demand for advanced chips and, consequently, the sophisticated equipment required to produce them.

Lam Research’s pivotal role in manufacturing advanced chips for AI workloads and high-bandwidth memory (HBM) places it at the forefront of this technological revolution.

Also Read: Applied Materials, Lam Research, KLA Drop Amid Fresh Trade War Fears, Revenue Risk

The company’s strong performance is further strengthened by strategic investments and an expanding global footprint. However, this growth narrative is partially tempered by ongoing concerns surrounding the Trump administration’s tariff policies, broader geopolitical tensions, and macroeconomic uncertainties.

Despite these headwinds, Lam Research is currently trading above its 50-day moving average of $86.81, having gained 50% in the last three months, easily surpassing the Nasdaq 100’s over 24% rise during the same period.

The company’s financial results underscore this momentum. On April 23, Lam Research stock climbed nearly 5% after reporting third-quarter revenue of $4.72 billion, a 24.41% year-over-year increase that beat analyst consensus estimates of $4.59 billion.

The adjusted gross margin for the quarter stood at 49%. Looking ahead, Lam Research anticipates fourth-quarter revenue to range between $4.7 billion and $5.3 billion, well above the $4.45 billion estimate, signaling continued confidence in its near-term outlook.

Macroeconomic Tailwinds

Lam Research is strategically positioned to capitalize on recent policy shifts aimed at strengthening the U.S. chip industry. President Donald Trump’s “Big Beautiful Bill,” for instance, proposes an increase in the semiconductor investment tax credit from 25% to 30% through 2026.

This incentive is expected to encourage chipmakers to expand domestic production, directly driving greater demand for Lam’s essential manufacturing equipment. Additionally, the bill ends the $7,500 EV tax credit after September 30, which may impact demand/pricing in the short run.

Analysts Weigh In

Industry experts are increasingly bullish on Lam Research. In May, CNBC’s Jim Cramer publicly recommended Lam Research over key competitors ASML Holding ASML and Applied Materials AMAT.

This sentiment was echoed on June 9 by Bank of America Securities analyst Vivek Arya, who highlighted Lam Research’s improving outlook at a recent tech conference.

Arya noted that Lam, alongside Applied Materials and KLA Corp. KLAC, is experiencing strong momentum in leading-edge foundry/logic (F/L) and advanced DRAM wafer fab equipment (WFE).

This robust demand is helping to offset softness in the Chinese market and trailing-edge spending, with Arya projecting mid-single-digit year-over-year growth for 2025.

Arya emphasized Lam’s early-stage NAND upgrades across several customers, identifying this as a significant $40 billion multi-year opportunity.

He also underscored the company’s strong positioning in the crucial DDR5/HBM markets. Based on this optimistic outlook, Arya raised his price target on Lam Research to $100 from $90.

In comparison, Arya also increased his price target for KLA Corp to $900 from $825, citing strong 2nm/GAA investment trends, expansion into advanced packaging markets, and KLA’s top-tier profitability.

Interestingly, all three vendors view China as “de-risked” for 2025 despite ongoing geopolitical tensions, expecting the region to contribute 25%–30% of their overall sales.

While Lam Research’s year-to-date performance is strong, its peers have also seen significant gains: ASML is up 16%, Applied Materials 22%, and KLA Corp over 47%.

Price Action: LRCX stock is trading lower by 0.02% to $101.04 at last check Friday.

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