The Nasdaq-100 Technology Sector index has seen a significant 50% increase in the past year, driven by the rising demand for artificial intelligence (AI)-related hardware and software. This surge in AI technology has led to a sharp rise in the share prices of many companies, including big players like Alphabet and Microsoft.
One company that investors should consider buying shares of is Lam Research (NASDAQ: LRCX), a Nasdaq-100 component that has seen a 77% jump in the past year. The company’s recent results show that it still has the potential for strong gains.
Lam Research, a semiconductor manufacturing equipment provider, reported better-than-expected third-quarter results with revenue of $3.79 billion and earnings of $7.79 per share. The company attributes its growth to an improved environment for semiconductor equipment spending, particularly in memory manufacturing equipment.
With 44% of its revenue coming from supplying memory manufacturers, Lam Research is benefiting from the growing demand for high-bandwidth memory (HBM) used in AI chips. The company’s guidance for the current quarter suggests a return to top-line growth, with revenue expected to increase by 18% year over year.
Analysts predict a solid turnaround in Lam’s performance in the new fiscal year, with revenue and earnings growth expected to remain healthy over the next couple of years. The stock is currently trading at 34 times trailing earnings and 25 times forward earnings, indicating potential for a significant increase in stock price.
Investors should consider buying shares of Lam Research before it sees further growth. The potential acceleration in growth could lead to a richer multiple and a stronger upside for the stock. With the AI boom driving demand for semiconductor equipment, Lam Research is well-positioned for future success.