Bernstein Lowers Lam Research Price Target to $350

Bernstein SocGen Group analyst Stacy Rasgon lowered the price target on Lam Research (NASDAQ: LRCX) to $350 (from $385) while maintaining an Outperform rating.

“Were investors tilting at windmills? LRCX F1Q27 results were decent ($8.22B/$2.20 vs Street at $8.13B/$2.19) driven by Systems revenue.

Foundry revenues rose ~41% QoQ, DRAM +17%, NAND +52%, and Logic +8%. Gross margins at 52.4% were above expectations. China revenue exposure grew meaningfully to ~35% in the quarter, up ~$1.1B QoQ.

F2Q27 guidance was in line with consensus but likely below whispers ($8.6B/$2.33/ 52.5% vs Street $8.6B/$2.34/51.9%), though management noted supply constraints impacting outlook (suggesting any slippage would ship in March).

The company provided an initial CY27 WFE outlook at >$200B (noting continued cleanroom constraints) and reiterated confidence in outgrowing the market once again (suggesting >30% systems revenue growth) as well as expecting >15% growth in CSBG, Given the inline guide the stock sold off some in the aftermarket though we suspect without the supply constraints outlook would have been OK.

However, our recent conversations suggest that some buy side investors could have been looking for a 2027 WFE well in excess of $200B which may be contributing as well, though frankly we have viewed some of the more bullish outlooks offered up (some at $250B+?) as quixotic given cleanroom constraints.

That being said, we have no doubt that actual demand is well above even those levels, and as the industry builds out datacenter capacity we remain very confident that the tools will follow.

In the meantime we believe Lam is presenting an increasingly compelling profile with (now) a reset from what may have been unrealistic expectations, strong margin performance, a likely sharply increased buyback, and valuation growing quite supportive.”

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