Is Lam Research (LRCX) Stock Worth Buying After the Morgan Stanley Upgrade?

TLDR

• Morgan Stanley upgraded LRCX from Equalweight to Overweight, raising its price target to $331 from $293
• The stock currently trades at $284.72, implying roughly 16% upside to the new target
• Morgan Stanley projects 59% NAND systems growth in 2027, which would exceed the prior peak set in 2021
• Morgan Stanley also downgraded Applied Materials (AMAT) to Equalweight as part of the same call
• 24 analysts have revised LRCX earnings estimates upward for the upcoming period

Morgan Stanley upgraded Lam Research (LRCX) to Overweight on Monday, May 18, raising its price target to $331 from $293. The stock was trading at $284.72 at the time of the call, making the new target roughly 16% above current levels.

Lam Research Corporation, LRCX

The move marks a shift in Morgan Stanley’s stance after the firm had previously favored DRAM equipment exposure over NAND.

The upgrade is built around one key projection: Morgan Stanley now expects 59% NAND systems growth in calendar year 2027. That would push NAND above the previous peak recorded in 2021.

The firm also lifted its 2027 revenue forecast for Lam Research to $35.4 billion, up from $34.6 billion. Earnings per share estimates for the same year moved to $9.71 from $9.46.

Morgan Stanley applied a 34-times target multiple to reach the $331 price target. That’s higher than the multiple used in the previous $293 target.

The firm also updated how it values Lam Research relative to Applied Materials. Previously, Lam carried a 10% premium to AMAT. That premium has now been raised to 20%, slightly above the three-year average of 16%. The firm said this reflects growing confidence in Lam’s ability to gain market share in 2027.

As part of the same note, Morgan Stanley downgraded Applied Materials (AMAT) to Equalweight with a new price target of $502. MKS Instruments (MKSI) was named a Top Pick, with its price target raised to $374 from $354.

Recent Analyst Activity

LRCX has attracted attention from several other firms in recent weeks. Stifel raised its price target to $325 following Lam’s fiscal third-quarter results, which beat both Stifel’s and consensus estimates.

TD Cowen lifted its target to $340, pointing to share gains in foundry and DRAM and the potential for NAND wafer fab equipment spending to grow.

UBS kept a Buy rating on the stock and highlighted the company’s move into what it called an AI-driven growth cycle. Cantor Fitzgerald also held its Overweight rating with a $320 price target.

Wall Street consensus remains a Buy, with analyst price targets ranging from $220 to $385. A total of 24 analysts have revised earnings estimates upward for the upcoming period.

Insider Activity Worth Watching

One area that has drawn attention is insider selling. Over the past three months, insiders sold around $28 million worth of LRCX stock with no reported purchases.

Lam Research’s GF Score stands at 86 out of 100, with profitability and growth both rated 10 out of 10. The company’s P/E ratio is currently 53.72, which sits well above historical averages.

The stock did face pressure earlier after reports of U.S. Department of Commerce restrictions on tool shipments to China’s Hua Hong, a move that hit chip equipment makers broadly.

Lam Research provides fiscal fourth-quarter guidance that calls for revenue growth and margins above its target model for calendar year 2028 and beyond.

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