Lam Research (LRCX) Stock Forecast & Price Target

Lam Research has increased its market valuation multiple from 24x to 26x, reflecting strong momentum and positive financial revisions, with expectations for service revenue to grow 1.5 times from CY24 levels and double once the semiconductor industry reaches $1 trillion in revenues, anticipated by CY28. The company has successfully expanded its share of the global wafer fabrication equipment (WFE) market from approximately 10% to 15% over the past decade, demonstrating significant growth driven by market share gains. Furthermore, gross margins remain robust at 50.6%, bolstered by a favorable product mix and strength in regions like China, which have mitigated tariff-related challenges.

The financial outlook for Lam Research is negatively impacted by a combination of decreasing revenue projections linked to the new U.S. government export "50% rule," which is expected to significantly reduce sales by $600 million in CY26. Furthermore, the company's gross margins are forecasted to decline to 48.5% due to an unfavorable customer mix, with Chinese sales expected to decrease from 43% to below 30% by CY26, reflecting lower domestic spending. Additionally, near-term guidance suggests that the company is facing tariff-related headwinds and a worsening sales mix, which will further constrain profitability and revenue growth in the coming quarters.