LRCX

Lam Research manufactures wafer fabrication equipment and services for semiconductor production, specializing in etch, deposition, and clean processes that are critical for advanced chip manufacturing. The company dominates etch equipment with roughly 55% market share, benefiting from the structural shift toward more complex 3D architectures like 3D NAND and advanced logic chips that require significantly more etch steps per wafer. Memory customers are finally emerging from their inventory correction cycle, with SK Hynix and Micron both signaling capex increases for 2024 after cutting spending through most of 2023. Revenue growth accelerated to 22% while the company maintains best-in-class margins at 50% gross and 34% operating, generating a 66% ROE that reflects both cyclical recovery and Lam's pricing power in mission-critical processes. Trading at 37x forward earnings represents a reasonable entry point given memory capex should inflect higher through 2024 as AI-driven demand for HBM and datacenter SSDs drives the next upcycle.