Lam Research: We Raise Our Valuation and Are Focused on Long-Term Secular Drivers

We raise our fair value estimate for wide-moat Lam Research to $660 per share, from $620, behind slightly raised margin assumptions over the next five years. We continue to expect a top-line decline in fiscal 2024 as chipmakers, particularly in memory, reduce their capital expenditures in response to softer demand. Nevertheless, we are focused on long-term trends toward higher chip complexity, including high-bandwidth memory, gate all-around transistors, and advanced packaging that we believe will fuel durable growth. We see shares as slightly undervalued.