Key Takeaways
- Morgan Stanley shifted LRCX to Overweight from Equalweight, increasing the price target from $293 to $331
- Trading at $284.72 during the announcement, the stock has approximately 16% potential upside to the revised target
- Analysts forecast 59% expansion in NAND systems during 2027, surpassing the 2021 record high
- In a contrasting move, Morgan Stanley cut Applied Materials (AMAT) to Equalweight in the same research note
- Two dozen analysts have increased their earnings projections for LRCX in the current forecasting period
On Monday, May 18, Morgan Stanley elevated Lam Research (LRCX) to an Overweight rating while boosting the price objective from $293 to $331. With shares changing hands at $284.72 when the recommendation was issued, the updated target represents approximately 16% appreciation potential.
Lam Research Corporation, LRCX
This upgrade signals a notable strategic shift for Morgan Stanley, which had previously shown preference for DRAM equipment makers over NAND-focused companies.
The cornerstone of the bullish call centers on a singular forecast: Morgan Stanley anticipates 59% expansion in NAND systems throughout 2027. This projection would drive NAND spending beyond the industry’s previous high-water mark established in 2021.
The investment bank simultaneously increased its 2027 revenue projection for Lam Research to $35.4 billion, representing an upward revision from the prior $34.6 billion estimate. Full-year earnings per share expectations climbed to $9.71 from the earlier forecast of $9.46.
To arrive at the $331 price objective, Morgan Stanley assigned a 34-times valuation multiple. This represents an expansion from the multiple underlying the previous $293 target figure.
The firm has also recalibrated its relative valuation framework for Lam Research versus Applied Materials. The premium Lam commands over AMAT has been expanded from 10% to 20%, modestly exceeding the three-year historical average of 16%. Morgan Stanley attributed this adjustment to strengthening conviction in Lam’s market share expansion opportunities heading into 2027.
Within the same research publication, Morgan Stanley reduced Applied Materials (AMAT) to Equalweight while establishing a $502 price target. The firm designated MKS Instruments (MKSI) as a Top Pick, elevating its price objective to $374 from the previous $354.
Street Sentiment Remains Positive
LRCX has captured considerable interest from multiple investment firms in recent trading sessions. Stifel increased its price objective to $325 after Lam delivered fiscal third-quarter financial results that exceeded both Stifel’s internal projections and Street consensus expectations.
TD Cowen elevated its target to $340, emphasizing market share gains across foundry and DRAM segments alongside expectations for expanding NAND wafer fab equipment expenditures.
UBS maintained a Buy recommendation on the shares and emphasized the company’s entry into what analysts described as an AI-powered expansion phase. Cantor Fitzgerald similarly retained its Overweight stance with a $320 price objective.
Street consensus maintains a Buy rating, with analyst targets spanning from $220 to $385. Two dozen analysts have upwardly revised their earnings forecasts for the forthcoming reporting period.
Tracking Corporate Insider Transactions
Investors have taken note of recent insider transaction patterns. Throughout the previous three-month window, company insiders liquidated approximately $28 million in LRCX shares while recording zero purchases.
Lam Research currently holds a GF Score of 86 out of 100, with both profitability and growth metrics achieving perfect 10 out of 10 ratings. The company’s price-to-earnings ratio presently stands at 53.72, substantially elevated compared to historical norms.
Shares experienced downward pressure following news regarding U.S. Department of Commerce limitations on equipment shipments to China’s Hua Hong, a development that created headwinds across the semiconductor equipment sector.
Lam Research has issued fiscal fourth-quarter outlook projecting revenue expansion and profit margins exceeding its target operating model for calendar year 2028 and subsequent years.
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