1 Tech Stock to Buy Before the End of 2025
Key Points
Lam Research's lucrative position in the global supply chain for AI chips is underappreciated.
The company aims to grow its market share in the foundry and memory chip markets to over 50%.
- 10 stocks we like better than Lam Research ›
Lam Research (NASDAQ: LRCX) is a key supplier of equipment used in chip manufacturing. It has a long history of delivering solid business growth and market-beating returns for investors. But the company could be entering an even stronger growth phase as demand for artificial intelligence (AI) impacts the entire technology supply chain.
The stock has soared to new highs this year, but here's why it is poised for more highs in 2026 and beyond.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
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Why the stock is a buy
Lam Research has historically generated most of its revenue from sales of equipment used to make memory components for smartphones and computers. But management noted that 35% of its revenue last quarter was from selling equipment to foundry customers, which would include Taiwan Semiconductor Manufacturing, a key supplier for Nvidia.
The company is targeting more than a 50% share of its addressable market, including the foundry and memory markets. It is competitively positioned to succeed. This is evident by its stellar financial results, where it is seeing record earnings and improving margins.
Analysts expect earnings to grow at an annual rate of 17% in the coming years. The stock is trading at 27 times next year's consensus estimate, which seems reasonable relative to its opportunity to serve the high-growth AI chip market.
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John Ballard has positions in Nvidia. The Motley Fool has positions in and recommends Lam Research, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
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