Could Lam Research Be the Next $1 Trillion Company?

Recently, Nvidia CEO Jensen Huang predicted that chipmaker Marvell Technology would be the next trillion-dollar company, and there are other well-known semiconductor stocks like Advanced Micro Devices and Intel that are making their way toward that milestone.

However, the next trillion-dollar company might actually be an artificial intelligence (AI) player most people don't know about. Lam Research (NASDAQ: LRCX) is deeply ingrained in AI infrastructure and has a solid path to long-term growth. And its market cap has more than doubled year to date to exceed $500 billion.

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What Lam Research does

Lam Research specializes in wafer fabrication equipment and services for the semiconductor industry. To manufacture AI chips at scale without defects requires an array of high-end wafer fabrication tools of the types that Lam provides.

It has competitors, but it has established itself as one of the leaders in the industry, counting among its clients top names such as Samsung, SK Hynix, and Taiwan Semiconductor Manufacturing.

Thanks to the AI build-out, all of those companies are experiencing soaring demand for the semiconductors their foundries churn out. As a result, they are ramping up capital expenditures to bring new manufacturing capacity online and benefit from this generational opportunity. That foundry build-out will translate into higher revenue growth for Lam.

Just as more investors have in recent years come to understand that memory chips are as vital to AI data centers as graphics processing units (GPUs), more of them are starting to recognize that wafer fabrication is a key step in the manufacture of those memory chips, GPUs, and other types of semiconductors.

The fundamentals support a push to $1 trillion

Lam Research trades at a price-to-earnings ratio (P/E) of 81.8. While that valuation is nearly three times the S&P 500's average P/E, the company's underlying growth supports that premium valuation. Investors who can buy and hold the stock for multiple years will likely be happy getting in at current levels, especially based on Lam's first-quarter results.

Revenue increased by 24% year over year in that quarter and was up by 9% sequentially. That strong increase came with a 31.2% net profit margin, up from 28.2% in the prior-year period.

Those are solid numbers for a growth stock, but the exciting part is that its sequential revenue growth rate is projected to increase. This is an important development. When similar conditions occurred for other AI hardware companies such as Micron and Sandisk, the stocks responded with big rallies.

Second-quarter guidance implies $6.6 billion in revenue at the midpoint, which would mean 13% sequential growth. The actual results may be even better; in its fiscal Q1, Lam Research beat the guidance that it had provided in fiscal Q4 2025. Management had told investors to expect $5.7 billion in revenue at the midpoint of guidance. The company ended up reporting $5.84 billion.

Beating the midpoint of guidance again will put third-quarter revenue closer to $7 billion. The exact $7 billion figure, which is the high-end of guidance, would represent a 20% sequential growth rate. The company has proved over several quarters that it can boost profit margins while delivering higher growth. That setup, along with Lam Research's position in the AI infrastructure loop, gives it what it takes to reach a $1 trillion market cap.

Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, Lam Research, Marvell Technology, Micron Technology, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.