Portfolio: Zacks Focus List

Lam Research is the foremost leader in wafer fabrication equipment and accompanying services for advanced semiconductor manufacturing, leveraging decades of highly technical expertise in etch and deposition processes. The company enjoys a 45% market share in this critical niche for advanced semiconductors required to enable the rise of artificial intelligence and advanced robotics.

The company maintains best-in-class gross and EBITDA margins at 47% and 32%, respectively, while generating a 14% revenue and 24% earnings CAGR since 2013. In addition to the robust growth & margins, the company also deploys shareholder friendly share buybacks and dividend growth. The rise of AI has multiplied advanced equipment packaging demand, where Lam Research holds a dominant 60% market share. Given these ongoing secular growth tailwinds, best-in-class margins and dominant market position, and LRCX’s relatively tame 20x forward P/E, we think the stock is a must-own.