Buy LRCX Stock At $90?

Lam Research (NASDAQ:LRCX) stock has experienced a notable increase this year, rising by 22% and significantly outperforming the S&P 500’s modest gain of 2%. This remarkable performance can be attributed primarily to the company’s solid quarterly results, fueled by strong foundry revenues and improving margins.

Given this recent surge, the crucial question for investors is whether LRCX is still a compelling purchase. We believe it is. Despite its current price hovering around $90, we see little reason for worry regarding LRCX stock, particularly in light of its reasonable valuation. Our conclusion stems from a thorough analysis of Lam Research’s operational performance in recent years, along with its current and historical financial health. We have assessed the company based on several core metrics: Growth, Profitability, Financial Stability, and Downturn Resilience. Our results show that Lam Research demonstrates exceptionally strong operating performance and financial stability, positioning it as an attractive investment option. However, for those investors who prefer lower volatility compared to individual stocks, the Trefis High Quality portfolio offers an alternative — it has outperformed the S&P 500 and delivered returns exceeding 91% since its inception. Separately, see – What’s Better – Circle Stock Or Bitcoin?

How Does Lam Research’s Valuation Compare to the S&P 500?

When considering what you pay per dollar of sales or profit, LRCX stock appears slightly overvalued in relation to the wider market.

• Lam Research has a price-to-sales (P/S) ratio of 6.4 compared to a ratio of 3.0 for the S&P 500
• Furthermore, the company’s price-to-free cash flow (P/FCF) ratio stands at 24.4, while the S&P 500’s ratio is 20.5
• Additionally, it has a price-to-earnings (P/E) ratio of 23.5 versus the benchmark’s 26.4

How Has Lam Research’s Revenue Grown in Recent Years?

Lam Research’s Revenues have demonstrated significant growth over the past few years.

• Lam Research has experienced an average revenue growth rate of 2.8% over the last 3 years (compared to a 5.5% increase for the S&P 500)
• Its revenues have risen by 20.3% from $14 billion to $17 billion in the past 12 months (versus a growth of 5.5% for S&P 500)
• Moreover, quarterly revenues have increased by 24.4% to $4.7 billion in the latest quarter, up from $3.8 billion a year earlier (contrasting with a 4.8% rise for S&P 500)

How Profitable Is Lam Research?

Lam Research’s profit margins are significantly higher than those of most companies in the Trefis coverage universe.

• Lam Research’s Operating Income over the past four quarters amounted to $5.3 billion, representing a high Operating Margin of 30.8% (in comparison to 13.2% for S&P 500)
• Lam Research’s Operating Cash Flow (OCF) during this timeframe totaled $4.5 billion, indicating a moderate OCF Margin of 26.2% (versus 14.9% for S&P 500)
• For the period spanning the last four quarters, Lam Research’s Net Income was $4.7 billion – reflecting a considerably high Net Income Margin of 27.2% (in comparison to 11.6% for S&P 500)

Is Lam Research Financially Stable?

Lam Research’s balance sheet appears very robust.

• At the end of the most recent quarter, Lam Research’s debt level was $4.5 billion, while its market capitalization is $113 billion (as of 6/9/2025). This results in a very strong Debt-to-Equity Ratio of 4.1%(compared to 19.9% for S&P 500). [Note: A low Debt-to-Equity Ratio is preferable]
• Cash (including cash equivalents) constitutes $5.5 billion of the $20 billion in Total Assets for Lam Research. This results in a very strong Cash-to-Assets Ratio of 27.3% (in contrast to 13.8% for S&P 500)

How Resilient Is LRCX Stock During Economic Downturns?

LRCX stock has underperformed compared to the benchmark S&P 500 index during some recent downturns. Concerned about how a market crash could affect LRCX stock? Our dashboard How Low Can Lam Research Stock Go In A Market Crash? provides an in-depth analysis of how the stock has fared during and after previous market crashes.

Inflation Shock (2022)

• LRCX stock dropped 56.8% from a peak of $72.98 on 14 January 2022 to $31.50 on 14 October 2022, against a peak-to-trough decrease of 25.4% for the S&P 500
• The stock fully recovered back to its pre-Crisis peak by 11 December 2023
• Since then, the stock has risen to a peak of $112.73 on 10 July 2024 and is currently trading at about $88

COVID-19 Pandemic (2020)

• LRCX stock fell 45.0% from a high of $34.16 on 13 February 2020 to $18.79 on 20 March 2020, while the peak-to-trough decline for the S&P 500 was 33.9%
• The stock fully recovered back to its pre-Crisis peak by 14 July 2020

Global Financial Crisis (2008)

• LRCX stock dropped 75.0% from a high of $6.00 on 17 July 2007 to $1.50 on 19 November 2008, compared to a peak-to-trough decline of 56.8% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 23 May 2014

Putting All The Pieces Together: Implications for LRCX Stock

In conclusion, Lam Research’s performance across the discussed metrics is summarized as follows:

• Growth: Very Strong
• Profitability: Very Strong
• Financial Stability: Extremely Strong
• Downturn Resilience: Weak
• Overall: Very Strong

Overall, Lam Research has demonstrated excellent performance across the critical metrics we evaluated. We believe this strong operational and financial health is not entirely reflected in the current moderate valuation of the stock, making LRCX an appealing investment. This further reinforces our belief that Lam Research is a solid investment choice.

Although LRCX stock appears promising, investing in a single stock can entail risks. Conversely, the Trefis High Quality (HQ) Portfolio, comprising 30 stocks, has consistently outperformed the S&P 500 over the past 4-year period. Why is that the case? As a group, HQ Portfolio stocks yielded better returns with lower risk in comparison to the benchmark index; providing a smoother ride, as shown in HQ Portfolio performance metrics.