Why Lam Research Stock Crushed the Market Today

Chip fabrication equipment maker Lam Research (NASDAQ: LRCX) experienced a bit of a rally in its stock on Monday. A big researcher flagged the company as a fine bargain in the semiconductor universe, and investors took the recommendation to heart. They pushed Lam's stock up by more than 5% in value on a day when the S&P 500 index dipped into the red with a 0.2% decrease.

Bank on Lam, says researcher

That researcher was Bank of America, which felt compelled to update investors on the current state of "semi" stocks.

Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free »

According to reports, in its analysis the bank pointed out that semiconductors have been (for the moment, anyway) exempted from the sprawling list of tariffs imposed by the current U.S. presidential administration on this country's trading partners. That's in contrast to finished products, including smartphones, that are packed with the technology.

The Bank of America team wrote that, in its opinion, companies with traits like solid fundamentals and strong pricing power will come out ahead of peers in the current adversarial climate. It specifically mentioned four potential winners in the broad semi space. Along with Lam, these are Nvidia, Broadcom, and Cadence Design Systems.

All four of those companies, according to the bank, offer attractive scale, boast relatively wide profit margins, and have strong balance sheets.

No one likes a fight

The main concern of the analysis is, of course, the current tariff spat, and just now it's anyone's guess how and when it'll be resolved. On that basis alone, I'd personally be quite wary of manufacturers that are either based outside the U.S. or are dependent on components from abroad. Yes, resilient fundamentals are encouraging, but a protracted conflict could damage even the strongest businesses.

Should you invest $1,000 in Lam Research right now?

Before you buy stock in Lam Research, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Lam Research wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $578,035!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 5, 2025

Bank of America is an advertising partner of Motley Fool Money. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America, Cadence Design Systems, Lam Research, and Nvidia. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.