Lam Research: AI Chip Leader Beating Nvidia, Broadcom

Published Date : 03/11/2025 

Lam Research has more than doubled in 2025, outpacing Nvidia and Broadcom in the AI chip market. Its strong performance and favorable market conditions make it an attractive investment. 

This AI semiconductor stock has more than doubled so far in 2025, and it can still be bought at an attractive valuation.

Nvidia and Broadcom are the leading players in the artificial intelligence (AI) chip market, with both companies witnessing significant growth in revenue and earnings thanks to terrific demand. While Nvidia is the dominant force in the AI data center graphics processing unit (GPU) market, Broadcom leads the custom AI processor space. Both types of chips are being deployed for AI model training and inference, which explains why both have been reporting outstanding growth in recent quarters.

Their impressive financial performance has translated into solid upside on the market as well. Nvidia stock has gained 42% this year as of this writing, while Broadcom has registered a 56% increase. However, there's another semiconductor stock that has delivered much bigger gains than these giants. Lam Research (LRCX) stock has shot up 117% in 2025 as of this writing.

Lam Research manufactures and sells semiconductor manufacturing equipment that's used for fabricating chips. The company also provides customer support services and upgrades. The industry in which Lam operates is enjoying healthy growth owing to the AI-fueled global chip boom. Organizations and governments across the world are showing a massive appetite for semiconductors that power AI applications. This is evident from the multibillion-dollar deals struck by major AI companies and hyperscalers in recent months to build out more AI infrastructure. In fact, Nvidia projects that building AI infrastructure could require $3 trillion to $4 trillion worth of investment in the next five years.

Not surprisingly, consulting giant PwC estimates that a whopping $1.5 trillion could be spent on new chip fabrication facilities between 2024 and 2030. Lam Research is going to be one of the key beneficiaries of this massive outlay as foundries and chipmakers invest in more equipment to churn out more chips. The company released its fiscal 2026 first-quarter results (for the quarter ended Sept. 28) on Oct. 22, and its numbers were comfortably ahead of analysts' expectations.

Lam reported a year-over-year increase of 27.5% in revenue to $5.32 billion. Its non-GAAP (adjusted) earnings increased at a stronger pace of 46% from the year-ago period to $1.26 per share. CEO Tim Archer remarked on the latest earnings call with analysts that AI-driven semiconductor equipment requirements 

Frequently Asked Questions (FAQS): 

Q: What is Lam Research's main business?

A: Lam Research manufactures and sells semiconductor manufacturing equipment, provides customer support services, and offers upgrades for fabricating chips.

Q: How much has Lam Research's stock increased in 2025?

A: Lam Research's stock has shot up 117% in 2025 as of this writing.

Q: What is the estimated investment in AI infrastructure over the next five years?

A: Nvidia projects that building AI infrastructure could require $3 trillion to $4 trillion worth of investment in the next five years.

Q: What is Lam Research's revenue and earnings growth for the fiscal 2026 first quarter?

A: Lam Research reported a year-over-year increase of 27.5% in revenue to $5.32 billion and a 46% increase in non-GAAP earnings to $1.26 per share.

Q: What is the current forward earnings multiple for Lam Research?

A: Lam Research stock can be bought at an attractive 33 times forward earnings estimates, in line with the tech-laden Nasdaq-100 index's forward earnings multiple. 

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