Lam Research (LRCX) Stock: Morgan Stanley’s Bold Upgrade Signals Major NAND Recovery Ahead

Quick Summary

• Morgan Stanley has elevated LRCX to Overweight from Equalweight, pushing the price target from $293 to $331
• Shares were trading at $284.72 when the upgrade was announced, suggesting approximately 16% potential upside
• The firm anticipates 59% growth in NAND systems during 2027, surpassing the 2021 record high
• In the same research note, Morgan Stanley cut Applied Materials (AMAT) to Equalweight
• A total of 24 analysts have recently increased their earnings projections for LRCX

On Monday, May 18, Morgan Stanley elevated its rating on Lam Research (LRCX) to Overweight, simultaneously increasing the price objective to $331 from the previous $293. At the time of this call, shares were changing hands at $284.72, positioning the updated target approximately 16% higher than market prices.

Lam Research Corporation, LRCX

This upgrade represents a notable pivot in Morgan Stanley’s outlook, particularly after the investment bank had previously shown preference for DRAM equipment exposure rather than NAND.

The rationale centers on a single critical forecast: Morgan Stanley now anticipates 59% expansion in NAND systems throughout calendar 2027. Such growth would elevate NAND spending beyond the historical high established in 2021.

Additionally, the firm increased its 2027 revenue projection for Lam Research to $35.4 billion, climbing from the prior $34.6 billion estimate. The earnings per share outlook for that year also rose to $9.71 from $9.46.

To arrive at the $331 price objective, Morgan Stanley employed a 34-times valuation multiple. This represents an expansion from the multiple underpinning the earlier $293 target.

The bank has also adjusted its comparative valuation framework between Lam Research and Applied Materials. The premium Lam commanded over AMAT previously stood at 10%. Morgan Stanley has now expanded this premium to 20%, marginally exceeding the three-year average of 16%. According to the firm, this adjustment mirrors increasing conviction in Lam’s capacity to capture additional market share throughout 2027.

Within the same research communication, Morgan Stanley lowered Applied Materials (AMAT) to Equalweight, assigning a fresh price target of $502. Meanwhile, MKS Instruments (MKSI) received Top Pick designation, with its target elevated to $374 from $354.

Other Analyst Perspectives

LRCX has captured the interest of multiple research firms in recent sessions. Stifel increased its price objective to $325 after Lam’s fiscal third-quarter performance exceeded both Stifel’s internal models and Street consensus.

TD Cowen elevated its target to $340, emphasizing market share expansion in foundry and DRAM segments, along with anticipated growth in NAND wafer fab equipment expenditure.

UBS maintained its Buy recommendation on the shares while emphasizing the company’s entry into what the firm characterized as an AI-fueled expansion phase. Cantor Fitzgerald similarly retained its Overweight stance with a $320 price objective.

Street consensus maintains a Buy rating overall, with analyst price objectives spanning from $220 to $385. Notably, 24 analysts have recently revised their earnings expectations upward for the coming period.

Notable Insider Transactions

One element attracting scrutiny involves insider selling activity. Throughout the preceding three months, company insiders disposed of approximately $28 million in LRCX shares, with zero recorded purchases during the same timeframe.

Lam Research’s GF Score currently registers at 86 out of 100, featuring profitability and growth metrics both achieving perfect 10 out of 10 ratings. The company’s P/E ratio presently sits at 53.72, considerably elevated compared to historical norms.

The stock experienced downward pressure following news regarding U.S. Department of Commerce limitations on equipment shipments to China’s Hua Hong, a development that impacted semiconductor equipment manufacturers across the board.

Lam Research has issued fiscal fourth-quarter guidance projecting revenue expansion and profit margins exceeding its target operating model for calendar 2028 and subsequent years.

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