We believe Lam Research (LRCX) stock could be a promising investment opportunity. Why? Because it offers robust margins, a low-debt capital structure, and strong momentum. The stock is also now trading below its 52-week peak amid some concerns about the slowing growth in China and in the NAND memory space.
POLAND – 2024/01/31: In this photo illustration a Lam Research logo seen displayed on a smartphone. (Photo Illustration by Mateusz Slodkowski/SOPA Images/LightRocket via Getty Images)
SOPA Images/LightRocket via Getty Images
There Are Several Factors Favoring LRCX Stock
LRCX has risen 107% this year, yet it still has room for additional gains due to solid fundamentals and the fact that it is 11% off its 52-week high. Recent results support this perspective; strong demand from customers for AI-driven memory and gate-all-around architecture tools have pushed record Q3 calendar 2025 operating margins to 35.0%. Long-term debt fell to $3.73 billion by September 2025, indicating a low-debt profile. The momentum is clear with the 2025 Wafer Fabrication Equipment (WFE) spending outlook increased to $105 billion, fueled by heightened orders for advanced deposition and etch products, as well as new product adoption such as SABRE 3D. The stock has gained over 100% year-to-date, despite a recent slight decline, with guidance for Q4 calendar 2025 revenue surpassing consensus expectations.
The Fundamentals Are Strong
- Long-Term Profitability: Approximately 32.5% operating cash flow margin and 30.2% operating margin over the last 3-year average.
- Strong Momentum: Currently positioned in the top 10 percentile of stocks regarding “trend strength” – our proprietary momentum metric.
- Revenue Growth: Lam Research experienced a revenue growth of 25.7% LTM and a 4.0% average over the last 3 years, although this is not purely a growth narrative.
- Room To Run: In spite of its momentum, LRCX stock is trading 11% below its 52-week high.
Below is a brief comparison of LRCX’s fundamentals against S&P medians.
Summary
Trefis
*LTM: Last Twelve Months
But Be Cautious of the Risks
MORE FOR YOU
Although LRCX stock could represent an attractive investment opportunity, it’s prudent to remain conscious of its historical drawdowns. LRCX dropped 75% during the Dot-Com crash and nearly 75% again during the Global Financial Crisis. The inflation shock in 2022 also negatively impacted it, with a decline of around 56%. Even more recent downturns — such as the 2018 correction and the Covid sell-off — saw losses approaching 45%. While the stock’s strong fundamentals are noteworthy, history indicates that significant market instability can have severe effects at any time. However, risk extends beyond major market crashes. Stocks can decline even in favorable market conditions – consider factors such as earnings reports, business updates, and outlook revisions. Check out LRCX Dip Buyer Analyses to explore how the stock has rebounded from sharp declines in the past.
If you wish to obtain additional information, read Buy or Sell LRCX Stock.
LRCX Is Just One of Several Such Stocks
You may also consider:
We selected these stocks based on the following criteria:
- Market capitalization greater than $2 billion
- High operating or (cash flow from operations) margins
- No instances of significant revenue declines in the last 5 years
- Low-debt capital structure
- Strong momentum
A portfolio initiated on 12/31/2016 with stocks meeting the above criteria would have performed as follows:
- Average 12-month forward returns of nearly 15%
- 12-month win rate (percentage of selections delivering positive returns) of approximately 60%
The Right Approach to Investing Is Through Portfolios
Individual stocks can rise or fall dramatically, but one thing remains crucial: maintaining your investment. A suitable portfolio can help you stay invested, capture potential gains, and reduce the risks related to any single stock.
The Trefis High Quality (HQ) Portfolio, comprising a selection of 30 stocks, has a history of consistently outperforming its benchmark, which includes all three – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? In aggregate, HQ Portfolio stocks have yielded better returns while exhibiting lower risk compared to the benchmark index; it’s been less of a roller-coaster experience, as seen in HQ Portfolio performance metrics.