Bernstein raised its price target for Lam Research (NASDAQ:LRCX) to $275 from $225 while maintaining an Outperform rating, a move that represents a roughly 22% increase to the prior target. The firm also increased the valuation multiple it applies to the stock, moving from 35x to 40x, and based the new target on 40x average fiscal year 2027/2028 earnings per share.
In its analysis, Bernstein highlighted several industry inflections that it says position Lam Research favorably. The firm cited exposure to gate-all-around (GAA) architecture, advanced packaging, high bandwidth memory (HBM), NAND upgrades and eventual greenfield additions. Bernstein also noted "really solid internal execution" at the company.
Bernstein further suggested the company may hit its calendar year 2028 analyst-day targets in fiscal 2027 or earlier, reflecting a more optimistic timeline for Lam's roadmap. The firm described the current semiconductor capital equipment cycle as one that "could continue for quite a while," reasoning that newly built cleanroom space will require time before becoming operational and could thereby maintain elevated industry spending levels.
The analyst emphasized that Lam's valuation "remains rich," even after the target increase, but nevertheless raised the multiple in light of the broader industry's growth potential. The new price target was explicitly derived from applying a 40x multiple to the average of fiscal 2027 and 2028 EPS estimates.
Lam Research's recent quarterly results appear to have reinforced the more bullish outlook. The company reported earnings that exceeded market expectations and provided guidance that topped consensus. Management projected March quarter revenue of $5.7 billion, representing a 7% sequential increase and a 21% year-over-year gain. That guidance surpassed Wall Street's estimate of $5.2 billion.
In response to the results and guidance, a number of other brokerages updated their assessments. JPMorgan raised its price target to $300 from $165, pointing to strong customer demand and anticipated resilience in China revenue. TD Cowen lifted its target to $290 from $170 and highlighted Lam's positive wafer fabrication equipment outlook for 2026, which the firm expects to reach $135 billion. Berenberg moved its target to $265 from $250 and kept a Buy rating, citing favorable trends in wafer fabrication equipment spending. Wolfe Research maintained a Peerperform rating while acknowledging the company's strong guidance, and KeyBanc Capital Markets reiterated its Sector Weight rating after reviewing second-quarter earnings.
Taken together, the analyst adjustments and Lam's quarterly beat indicate a broadly more optimistic view among several firms about the company's near- to medium-term prospects. Bernstein's decision to raise both the price target and the earnings multiple underscores its view that the semiconductor equipment cycle and Lam's positioning within it support a higher valuation, even as the firm notes the stock's relatively rich price-to-earnings profile.
At the same time, the firm’s scenario depends in part on the pace at which new cleanroom capacity comes online and on continued strength in customer demand. Those dynamics will influence industry spending levels and, by extension, Lam’s ability to reach the updated targets within the revised timeframe.
Key developments:
- Bernstein raised its price target on Lam Research to $275 from $225 and maintained an Outperform rating.
- Bernstein increased its applied multiple to 40x from 35x and used 40x average fiscal 2027/2028 EPS to derive the new target.
- Lam reported an earnings beat and guided to March quarter revenue of $5.7 billion, above Wall Street's $5.2 billion estimate; several other brokers updated price targets in response.