Lam Research Stock Surges 154% in H1'26: Should You Buy More or Exit?

Lam Research Corporation LRCX has been one of the standout semiconductor stocks in 2026 so far. The stock has surged 153.9% in the first half of the year, far ahead of the Zacks Electronics - Semiconductor industry's 54.9% gain.It has also outperformed several well-known peers, including Amkor Technology, Inc. AMKR, Lattice Semiconductor Corporation LSCC and Broadcom Inc. AVGO. During the same period, Amkor Technology, Lattice Semiconductor and Broadcom have gained 118.1%, 108% and 8.9%, respectively.While such a massive rally may prompt some investors to book profits and exit the investment, Lam Research's strong fundamentals suggest there could still be room for upside. The company remains one of the clearest beneficiaries of the AI infrastructure boom, and demand trends continue to work heavily in its favor.Lam Research 1H26 Price Return PerformanceImage Source: Zacks Investment ResearchAI Spending Continues to Work in Lam Research's FavorLam Research sits at the center of the AI chip manufacturing ecosystem. Instead of designing chips, it supplies the manufacturing equipment that companies like Taiwan Semiconductor Manufacturing and Samsung use to produce advanced semiconductors.This position gives Lam Research direct exposure to one of the strongest investment themes today — artificial intelligence (AI) infrastructure. The company is benefiting from rising demand for advanced packaging technologies, high-bandwidth memory (HBM) and next-generation chip architectures, all of which require increasingly sophisticated etch and deposition equipment.Lam Research is also strengthening its technology portfolio. Its ALTUS ALD system improves chip manufacturing efficiency through molybdenum-based deposition, while the Aether platform helps customers build denser and more powerful chips. As AI processors become more complex, these technologies become increasingly valuable.Management expects advanced packaging revenues to grow by more than 50% in 2026 after strong growth in 2025. New manufacturing technologies such as backside power distribution and dry-resist processing should provide additional growth opportunities over the next several years.Lam Research has already started seeing the benefits. The company’s revenues have remained above $5 billion for four consecutive quarters, indicating healthy demand from leading semiconductor manufacturers.Lam Research's Strong Execution Supports the Bull CaseLam Research's latest quarterly results show that AI demand is translating into financial growth.In the third quarter of fiscal 2026, revenues increased 24% year over year to $5.84 billion, beating the Zacks Consensus Estimate by 1.3%. Growth was driven by both its Systems business and Customer Support Business Group. Non-GAAP earnings rose 41.3% from the year-ago quarter to $1.47 per share and exceeded estimates by 8.1%.Lam Research Corporation Price, Consensus and EPS Surprise Lam Research Corporation price-consensus-eps-surprise-chart | Lam Research Corporation QuoteProfitability also improved despite ongoing geopolitical tensions, tariffs and a challenging macro environment. Lam Research's non-GAAP operating margin expanded 220 basis points year over year to 35%, helped partly by a broader manufacturing footprint in Asia and continued cost discipline.These results suggest Lam Research is not simply benefiting from a temporary AI spending wave. It is also executing well operationally by improving margins while growing revenues.Analysts expect momentum to continue. The Zacks Consensus Estimate for fiscal 2026 and 2027 revenues implies a year-over-year increase of 25.4% and 31.1%, respectively. The consensus mark for fiscal 2026 and 2027 earnings per share indicates growth of 37.2% and 38.3%, respectively.Solid Growth Projections Justify LRCX’s Premium ValuationValuation-wise, Lam Research is overvalued, as suggested by the Zacks Value Score of F.In terms of forward 12-month Price/Earnings (P/E), LRCX shares are trading at 76.24X, higher than the sector’s 35.94X. However, we believe that the company’s steady earnings growth and rising AI-linked demand justify the premium valuation.Lam Research Forward 12-Month P/E RatioImage Source: Zacks Investment ResearchCompared with major semiconductor equipment providers, LRCX trades at a premium P/E multiple than Lattice Semiconductor, Amkor Technology and Broadcom. At present, Lattice Semiconductor, Amkor Technology and Broadcom have forward 12-month P/E multiples of 75.34, 40.65 and 22.66, respectively.Conclusion: Buy More LRCX SharesLam Research remains a high-quality AI infrastructure play with strong growth prospects. The AI infrastructure buildout remains in its early stages, advanced packaging demand continues to grow, and Lam Research's leadership in etch and deposition gives it a competitive advantage that should be difficult to replicate.The company’s innovation and operational efficiency provide a solid foundation for future growth. Considering these factors, accumulating LRCX stock appears to be the most prudent strategy for investors.Currently, Lam Research carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.Free: See Our Top Stock And 4 Runners UpThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks