Key Takeaways
- Morgan Stanley elevated LRCX from Equalweight to Overweight, boosting the price target from $293 to $331
- Shares were trading at $284.72 when the upgrade was issued, suggesting approximately 16% potential upside
- Analysts forecast 59% expansion in NAND systems for 2027, surpassing the 2021 record high
- In the same research note, Morgan Stanley cut Applied Materials (AMAT) to Equalweight
- A total of 24 Wall Street analysts have increased their earnings projections for LRCX’s next reporting period
On Monday, May 18, Morgan Stanley elevated Lam Research (LRCX) to an Overweight rating while increasing the price objective to $331 from the previous $293. At the time of publication, shares were changing hands at $284.72, positioning the updated target approximately 16% above market levels.
Lam Research Corporation, LRCX
This rating change represents a notable pivot in Morgan Stanley’s investment thesis, particularly after the firm had previously shown preference for DRAM equipment exposure rather than NAND.
The upgrade centers on a single critical forecast: Morgan Stanley anticipates 59% growth in NAND systems throughout calendar year 2027. This projection would propel NAND equipment sales beyond the historic high achieved in 2021.
The investment bank also increased its revenue projection for Lam Research in 2027 to $35.4 billion, up from the prior estimate of $34.6 billion. Accompanying this revision, earnings per share forecasts for 2027 climbed to $9.71 from $9.46.
To arrive at the $331 price objective, Morgan Stanley applied a 34-times valuation multiple. This represents an expansion from the multiple used to calculate the previous $293 target.
The firm has also revised its relative valuation framework for Lam Research versus Applied Materials. Where Lam previously commanded a 10% premium over AMAT, that spread has now widened to 20%, exceeding the three-year historical average of 16%. According to the firm, this adjustment reflects increased conviction in Lam’s prospects for market share expansion in 2027.
Concurrently, Morgan Stanley lowered Applied Materials (AMAT) to Equalweight while establishing a $502 price target. The firm designated MKS Instruments (MKSI) as a Top Pick and raised its target to $374 from $354.
What Other Analysts Are Saying
LRCX has garnered increased coverage from multiple research firms over recent weeks. Stifel increased its price objective to $325 after Lam’s fiscal third-quarter earnings surpassed both the firm’s expectations and Street consensus.
TD Cowen pushed its target higher to $340, citing market share gains in foundry and DRAM segments alongside expectations for NAND wafer fab equipment spending acceleration.
UBS maintained its Buy recommendation and emphasized the company’s entrance into what analysts characterized as an AI-fueled expansion phase. Similarly, Cantor Fitzgerald retained its Overweight stance with a $320 price objective.
The Street consensus maintains a Buy rating, with analyst price objectives spanning from $220 to $385. Twenty-four analysts have recently raised their earnings forecasts for the company’s next reporting cycle.
Insider Trading Patterns
Recent insider transaction activity has caught investor attention. During the past three months, company insiders offloaded approximately $28 million in LRCX shares while recording zero purchases.
Lam Research holds a GF Score of 86 out of 100, with both profitability and growth metrics earning perfect 10 out of 10 ratings. The company’s price-to-earnings ratio currently stands at 53.72, substantially elevated compared to historical norms.
Shares experienced downward pressure following news of U.S. Department of Commerce limitations on equipment shipments to China’s Hua Hong, a development that impacted semiconductor equipment manufacturers across the board.
For its fiscal fourth quarter, Lam Research has issued guidance projecting revenue expansion and profit margins that exceed the company’s target operating model extending through calendar year 2028 and beyond.
