Lam Research Corporation (NASDAQ: LRCX)
Lam Research designs and builds products for semiconductor manufacturing, including equipment for thin film deposition, plasma etch, photoresist strip, and wafer cleaning processes. Having recently released its quarterly financial report, the company has seen an increase in mentions by 210% over the last day, prompting investors to wonder what makes the company gain so much hype. Currently, Lam Research shares trade at $500 per share.
Positive Hype
There are quite a number of reasons that contribute to the positive hype gained by Lam Research recently, here are some of them.
"Lam delivered solid March quarter performance, including record foundry-related revenues," said Tim Archer, Lam Research's President and Chief Executive Officer.
Balance Sheet and Cash Flow Results Cash and cash equivalents, short-term investments, and restricted cash and investments balances increased to $5.6 billion at the end of the March 2023 quarter compared to $4.8 billion at the end of the December 2022 quarter.
Deferred revenue at the end of the March 2023 quarter increased to $2,003 million compared to $1,984 million as of the end of the December 2022 quarter.
The chip-manufacturing equipment company has continued doling out its consistent (and growing) dividend payment, which currently yields 1.4% a year.
A new bull market for memory chips is coming -- eventually. When memory chipmakers cut current production, it sets up the next future period of undersupply, which means rising memory prices and intense investment from these manufacturers as they scale up and upgrade their tech processes.
Negative Hype
Although Lam Research has shown great results recently, there are still some drawbacks to investing in the stock right now. Here are two of them.
The chip downturn is in full force Lam Research's latest quarter, which ended in March 2023, was as expected: ugly. Revenue and profitability metrics were just above the midpoint of management's guidance provided a few months prior. Revenue was $3.87 billion (down 5% from a year ago).
On a generally accepted accounting principles (GAAP) basis, the gross margin was 41.5% (down from 44.7% last year). And earnings per share (EPS) came in at $6.01 (down 18% from last year).
Conclusion
Only 28% of the stock's value has been lost since its peak, and further losses are always possible. However, both Lam Research's company and the semiconductor industry have promising futures. The company is currently trading at an attractive price from a price-to-earnings (P/E) standpoint for investors prepared to buy now in anticipation of an impending boom in semiconductor spending. Additionally, the dividend yield of 1.3% on the stock is about average. Over the past ten years, the value of Lam Research stock has increased by nearly 12 times, driven by expansion in the semiconductor sector.
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