LRCX is not overvalued after its 7.4% drop; forward P/E near 25 from 27, and high equipment demand means the selloff is no worry. CEO sees spending above $200 billion in 2027 vs $150 billion in 2026, led by DRAM/advanced/NAND, supporting strong 2026-2027 and possibly 2028, though market prices it for cycle near end.
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Some earnings announcements have been released , including those from Lam Research,
The next company I want to talk about is Lam Research . Lam Research has announced its earnings. Unfortunately, the stock price has fallen by approximately 7.4%. I was tracking the price-to-earnings ratio before this, and the projected ratio for the next twelve months was around 27.
I think that after this drop, we will see it closer to 25. So , it is not overrated, especially after we heard TSMC announce that it will continue to invest. We have heard companies like ASML confirm that the market is still experiencing high demand for equipment.
So, as far as I'm concerned, I'm not a shareholder in Lam Research, but based on what we've heard so far, there's no need to worry about this sale. Some companies have exceeded profit and revenue expectations, but not by a large margin, so perhaps the market was expecting too much.
As for expectations, at the midpoint they were about $100 million higher than the average expectations . I think some semiconductor equipment companies have received slightly inflated valuations compared to normal valuations, and that's why we're seeing this slight decline.
I don't think 7% is an exaggeration, especially since the stock has risen by approximately 41% since the beginning of the year. Therefore, we are expected to see a rise of nearly 30% after this decline, which is impressive.
As for Lam Research, its CEO stated that spending on chip manufacturing equipment is expected to exceed $200 billion in 2027 , compared to approximately $150 billion in 2026. He pointed out that the main driver of growth is dynamic random access memory (DRAM), followed by advanced chip manufacturing technologies , and then NAND memory .
In any case, I think the equipment market will have another strong year in 2026 , i.e. in 2027, and possibly in 2028 as well. However, the market seems to be pricing the stock as if the economic cycle is nearing its end.