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On Thursday, Berenberg reiterated its Buy rating on Lam Research (NASDAQ:LRCX), an $85.66 billion market cap semiconductor equipment manufacturer, with a steadfast $90.00 price target. According to InvestingPro data, the company maintains a strong Buy consensus among analysts, with targets ranging from $70 to $125. In light of the company’s third-quarter results, which showed a 13.2% year-over-year revenue growth, the firm addressed the ongoing concerns regarding potential impacts of recent tariff changes on the electronics end-market demand and global semiconductor equipment capital expenditures (capex). Despite these concerns, Lam Research confirmed that it is keeping its wafer fabrication equipment (WFE) capex estimates unchanged for 2025, anticipating to remain within the $100 billion range.
The company, in its earnings call, expressed confidence in its growth prospects, citing a strong position to outperform the market due to its significant exposure to technology migrations among chipmakers. With a PEG ratio of 0.74, InvestingPro analysis suggests the stock is trading at an attractive valuation relative to its growth potential. Lam Research emphasized that their customer spending plans have not been altered since the initiation of the tariff changes in April. The company underlined that technology migrations are typically part of a multi-year investment strategy for chipmakers, who invest counter-cyclically to stay competitive.
The sentiment shared by Lam Research echoes comments made by TSMC during its first-quarter results the previous week, confirming that it would not be modifying its capex plans for the year 2025. However, Berenberg highlighted that despite the current stability, there remain uncertainties in the semiconductor market for the second half of 2025. The firm pointed out that the semiconductor tariff situation is still ambiguous, and potential U.S. restrictions on China’s access to AI chips could lead to a demand downturn that the market may not fully anticipate at this moment. Nevertheless, Lam Research maintains a strong financial health score according to InvestingPro, with a healthy current ratio of 2.54 and impressive return on equity of 50%, suggesting resilience to market uncertainties.
In other recent news, Lam Research Corporation has reported its Q1 2025 earnings, surpassing expectations with an earnings per share (EPS) of $1.04 and revenue totaling $4.72 billion, both exceeding forecasts. The company achieved a record gross margin of 49% since its merger with Novelis, highlighting strong operational efficiency. For the upcoming Q2 2025, Lam Research has projected revenue of $5 billion with a gross margin of 49.5%. In addition, Evercore ISI has raised Lam Research’s stock price target from $95 to $99, maintaining an Outperform rating, due to the company’s consistent performance and positive future outlook. The firm emphasized Lam Research’s potential to benefit from technological advancements in the semiconductor sector, particularly in areas like NAND enterprise SSDs and Gate-All-Around transistors. These developments reflect Lam Research’s strategic focus on growth and innovation, supported by increased R&D spending. Investors are advised to note these recent developments in assessing the company’s position within the evolving semiconductor industry.
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