1 Top Artificial Intelligence (AI) Stock Down 33% to Buy Hand Over Fist Before It Skyrockets

This has been a difficult year for Lam Research (NASDAQ: LRCX) investors as shares of the semiconductor manufacturing equipment supplier have dropped 4% in 2024, underperforming the 25% gains clocked by the PHLX Semiconductor Sector index, and it is worth noting that the past few months have been even more brutal for the company.

More specifically, Lam stock is down 33% since hitting a 52-week high on July 11. One of the reasons why that has been the case is because of the overall negativity surrounding the semiconductor equipment space, with industry bellwether ASML Holding finding it difficult to live up to Wall Street’s expectations.

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However, recent developments within the memory market, which accounts for a significant chunk of Lam’s revenue, have been positive. More importantly, the company’s latest results indicate that it could turn its poor stock market performance around and go on a bull run. In this article, we will take a closer look at Lam’s performance last quarter and check why buying this semiconductor stock could turn out to be a smart move.

Lam Research had a forgettable fiscal year 2024 as its revenue and earnings declined on account of poor memory demand, which was a result of the decline in the smartphone and personal computer (PC) markets. However, the company has started fiscal 2025 on a solid note.

Lam released its fiscal Q1 2025 results (for the three months ended Sept. 29) on Oct. 23. The company reported revenue of $4.17 billion, an increase of 20% from the prior-year period. The company’s adjusted earnings also increased an impressive 25% year over year to $0.86 per share. Analysts expected Lam to earn $0.81 per share on revenue of $4.01 billion.

The guidance was the icing on the cake. Lam expects $4.3 billion in revenue in the current quarter at the midpoint, which would be a 14% improvement over the year-ago quarter, along with adjusted earnings of $0.87 per share. Analysts would have settled for $0.85 per share in earnings on revenue of $4.26 billion.

Lam CEO Timothy Archer remarked on the latest earnings conference call that artificial intelligence (AI) is “driving strong investments in leading-edge logic nodes as well as advanced packaging segments, including high bandwidth memory or HBM.” Memory industry participants such as Micron Technology (NASDAQ: MU) have been witnessing robust demand for HBM, which is used in AI accelerators because of its power efficiency, higher capacity, and enhanced data transfer speeds.


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