Lam Research: Don't Chase The Stock (Rating Downgrade)

Bay Area Ideas4.06K FollowersFollow5ShareSavePlay(10min)CommentsSummaryLam Research is fundamentally robust, showing strong growth, margin expansion, and solid guidance, but valuation is now a bit stretched.Reliance on China has grown to 35% of revenues, heightening geopolitical and regulatory risks that could impact future performance.Profitability metrics are impressive: gross margin rose to 49.7% and operating margin to 34.3% YoY, with significant EPS growth and increased shareholder returns.I downgrade Lam Research to hold, as the P/E ratio has surged to 49.85, far above its 3-year median, leaving little room for further upside. xiao zhou/iStock via Getty Images In late November 2025, I provided an update for Lam Research Corporation (LRCX), and in that article, I downgraded the stock from a strong buy to just a buy. Despite strong results, guidance was slightly soft, China risks were present, and the valuationThis article was written byBay Area Ideas4.06K FollowersFollowI'm a full-time investor with a strong focus on the tech sector. I graduated with a Bachelor of Commerce Degree with Distinction, major in Finance. I'm also a proud lifetime member of the Beta Gamma Sigma International Business Honor Society. My core values are: Excellence, Integrity, Transparency, & Respect. I always, to the best of my ability, hold true to these values which I believe are key for long-term success. I would like to invite all of my readers to leave their constructive criticism and feedback in the comments section so that I can further enhance the quality of my work moving forward. Thank you and God Bless America!Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.