TD Cowen Ranks Lam Research Corp as Top Investment Pick

TD Cowen has identified Lam Research Corp (NASDAQ:LRCX) as its leading investment choice, owing to its exposure to secular trends like increased memory content in storage, mobile, and other applications, along with robust cash generation.

Positive Market Position

The company is strategically positioned for a projected resurgence in NAND wafer fab equipment investments over the next two years.

Analysts from TD Cowen point to a trend of underinvestment in the NAND sector during 2023 and 2024, coupled with easing restrictions on China that lay the groundwork for significant growth opportunities.

Growth Projections

NAND WFE is anticipated to be the fastest-growing segment of semiconductor equipment, boasting a compound annual growth rate of 28%, with expectations to reach $14 billion by 2026. This growth rate surpasses other segments, including:
– Leading-Edge Foundry/Logic (11%)
– DRAM (3%)
– Trailing-Edge technologies (flat)

After a steep decline in capital expenditures for NAND in 2023 and 2024, a strong rebound is expected due to rising demand for high-capacity enterprise solid-state drives (eSSDs) and refresh cycles in consumer electronics like PCs and smartphones.

Analyst Rating

“We rate LRCX Buy due to exposure to secular trends such as increasing memory content in storage, mobile and other applications; capital intensity for deposition and etching products should remain healthy,” the analyst stated.

TD Cowen has established a price target of $100 for Lam Research.