According to S&P Global Market Intelligence, Lam Research stock (NASDAQ:LRCX) surged as high as 16.5% this week. The semiconductor equipment manufacturer reported strong third-quarter profits and sales and provided an early 2023 projection. As of Thursday, October 20, the stock was up 13% for the week.
So, what’s the deal?
Lam Research published its profits for the three months that ended in September on October 19. Revenue of $5.07 billion exceeded analyst expectations by $160 million. Earnings were again strong, with non-GAAP (adjusted) EPS of $10.42, above analyst estimates by $0.88. Both of these metrics exceeded analyst expectations, which is a significant reason why Lam Research’s stock has risen so much this week. In addition to the profits beat, management provided a sales forecast for the fourth quarter of $5.1 billion at the midpoint, which was far above Wall Street’s $4.74 billion projection.
Lam’s stock (NASDAQ:LRCX) has taken a beating this year, with shares falling 37%. Investors have been concerned about a drop in semiconductor demand and the United States’ new export embargo on China. These strong profits are helping to alleviate these worries. However, the corporation is now experiencing some serious industry threats. Management currently forecasts industry demand to be 20% lower in 2023 compared to 2022, which might impair demand for manufacturers’ equipment.
Furthermore, China accounted for 30% of Lam’s revenue in the third quarter. The US government is hell-bent on killing the Asian country’s indigenous semiconductor sector, recently imposing an export embargo on items sold by Lam Research. If the export prohibition is extended, Lam Research’s income might suffer significantly, at least in the near term.
So, what now for Lam Stock?
Although Lam stock (NASDAQ:LRCX) is down this year, the firm has a wonderful track record of success. Since becoming public a few decades ago, the company’s revenue has increased by over 60,000%, resulting in stock gains of over 15,000% (excluding dividends), significantly ahead of the broad indexes. Its dividend yields little under 2% at the moment, and its dividend payment per share has been continuously increasing over the last several years.
Over the next year or two, Lam Research may be harmed by China and industrial demand. But, in the long run, the corporation has shown that it can benefit stockholders greatly.
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Author Okoro Chinedu 
