Is Lam Research the AI Dividend Stock Wall Street Is Overlooking?

It's not every day you get a tech stock that provides massive shareholder growth and pays a consistent, meaningful dividend. And to find one that's working in the red-hot semiconductor space is even more significant.

But you have one with Lam Research (NASDAQ: LRCX), which supplies critical components and services to foundries for the fabrication of semiconductor chips. Lam Research's dividend of $1.04 per share equates to a yield of 0.74%. And that dividend has doubled in the last five years.

Lam Research stock is on fire, up 100% this year. The California-based company is in the news today after posting its financial results for the quarter ending Sept. 28. Is Lam Research the dividend stock you've been looking for?

About Lam Research

Lam Research makes the equipment that foundries need to make microprocessors, memory devices, and other products used in chips for computing devices, mobile phones, smart cars, and entertainment systems. Its products are used for thin film deposition, plasma etching, photoresist stripping, and wafer cleaning.

All of these are critical components in the growing semiconductor industry, which Precedence Research values at $627.76 billion this year. The market is expected to grow to $1.2 trillion by 2034, a compound annual growth rate (CAGR) of 7.5%.

Image source: Getty Images.

Lam's earnings report

Earnings for the quarter ended Sept. 28 showed record revenue of $5.32 billion, up nearly 3% from a year ago. The operating margin of 35% was also a company record.

However, earnings per share fell from $1.35 in Q3 2024 to $1.24 in the recently concluded quarter.

Management said the company is expecting to top $105 billion in revenue for its water fabrication equipment in the 2025 calendar year, thanks to customers' stronger-than-expected investments in high-bandwidth memory products. And AI-related demand is expected to drive revenue in 2026. "We see the surge in AI data center demand creating billions of dollars of served available market expansion and share gain opportunity for Lam in the coming years," CEO Tim Archer said on the earnings call.

Lam Research issued guidance for the December quarter that includes revenue of $4.9 billion to $5.5 billion, and earnings per share of $1.05 to $1.25.

China concerns

China is Lam Research's biggest market, but trade tensions will have an impact. China represented 43% of Lam Research's sales in the third quarter, followed by Taiwan (19%) and Korea (15%). Archer told analysts that China is expected to account for less than 30% of company sales in the 2026 calendar year.

Lam Research stock is up 2% in morning trading today. While the company's exposure to China and next year's pullback is a concern, Lam Research is a notable play on semiconductor and AI growth -- and its dividend makes it particularly interesting.

Patrick Sanders has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Lam Research. The Motley Fool has a disclosure policy.