Key Takeaways
- LRCX received an upgrade from Morgan Stanley, moving from Equalweight to Overweight with a price target increase to $331 from $293
- At the current trading price of $284.72, the revised target suggests potential upside of approximately 16%
- Analysts at Morgan Stanley forecast explosive 59% growth in NAND systems for 2027, surpassing 2021’s record levels
- In a contrasting move, Morgan Stanley lowered Applied Materials (AMAT) to Equalweight within the same analyst note
- A total of 24 Wall Street analysts have increased their earnings projections for LRCX in the current period
On Monday, May 18, Morgan Stanley elevated its rating on Lam Research (LRCX) to Overweight, simultaneously boosting the price target from $293 to $331. With shares trading at $284.72 during the announcement, the updated target represents approximately 16% upward potential from current market levels.
Lam Research Corporation, LRCX
This rating adjustment signals a notable pivot in Morgan Stanley’s investment thesis, as the firm had historically shown preference for DRAM equipment exposure rather than NAND.
The core driver behind this upgrade centers on a single powerful forecast: Morgan Stanley anticipates 59% expansion in NAND systems during calendar year 2027. This projected surge would eclipse the previous high-water mark established in 2021.
Additionally, the investment bank increased its revenue outlook for Lam Research in 2027 to $35.4 billion, up from the prior estimate of $34.6 billion. The firm’s earnings per share projection for that year also climbed to $9.71 from $9.46.
To arrive at the $331 price objective, Morgan Stanley applied a 34-times valuation multiple. This represents an expansion from the multiple that underpinned the previous $293 target.
Morgan Stanley has also recalibrated its relative valuation framework between Lam Research and Applied Materials. The premium assigned to Lam versus AMAT has expanded from 10% to 20%, modestly exceeding the three-year historical average of 16%. According to the firm, this adjustment reflects increased conviction in Lam’s market share expansion prospects heading into 2027.
Within the same research note, Morgan Stanley reduced its rating on Applied Materials (AMAT) to Equalweight while setting a $502 price target. The firm designated MKS Instruments (MKSI) as a Top Pick and increased its target from $354 to $374.
Broader Analyst Sentiment
LRCX has garnered considerable attention from the analyst community in recent trading sessions. Stifel elevated its price objective to $325 after Lam delivered fiscal third-quarter earnings that exceeded both Stifel’s internal projections and broader market consensus.
TD Cowen pushed its target higher to $340, citing market share gains across foundry and DRAM segments, along with anticipated expansion in NAND wafer fab equipment expenditures.
UBS maintained its Buy recommendation on the shares and emphasized the company’s entrance into what analysts described as an AI-powered expansion phase. Meanwhile, Cantor Fitzgerald preserved its Overweight stance with a $320 price objective.
The Street’s consensus rating remains solidly at Buy, with analyst price targets spanning from $220 to $385. Notably, 24 analysts have revised their earnings forecasts upward for the coming period.
Insider Transaction Trends
Insider trading patterns have become a focal point for market observers. During the last three-month window, company insiders divested approximately $28 million in LRCX shares, with zero recorded insider purchases during this timeframe.
Lam Research maintains a GF Score of 86 out of 100, with both profitability and growth metrics earning perfect 10 out of 10 ratings. The company’s current P/E ratio stands at 53.72, significantly elevated compared to historical norms.
The stock experienced downward pressure following news of U.S. Department of Commerce limitations on equipment shipments to China’s Hua Hong, a development that weighed on semiconductor equipment manufacturers across the sector.
Lam Research has issued fiscal fourth-quarter guidance projecting revenue expansion and margin performance that exceeds its target operating model for calendar year 2028 and subsequent years.
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