Okay, so everyone's drooling over Nvidia and Broadcom, right? AI this, AI that. But let's be real, the real money is always made selling the shovels during a gold rush. And in this case, Lam Research is selling some damn fine shovels.
Nvidia's up 42% this year, Broadcom's at 56%. Those are rookie numbers. Lam Research? Try a cool 117%. And they ain't even making the flashy AI chips everyone's obsessed with. They're making the machines that make the chips. It's like the arms dealer in a war making more money than the soldiers... wait a minute.
The article throws around this PwC estimate: "$1.5 trillion could be spent on new chip fabrication facilities between 2024 and 2030." Trillion? Seriously? Who even has that kind of money? Oh, right, the same people who think flying to space is a fun weekend getaway. But offcourse, if you're gonna build a trillion-dollar industry, you need someone to build the factories. Enter Lam Research.
And get this, Lam's CEO Tim Archer says AI-driven semiconductor equipment requirements "play extremely well to Lam's product strengths." Corporate speak for "cha-ching!" I mean, give me a break. It's so obvious it hurts.
27.5% revenue increase, 46% earnings jump. Those aren't just good numbers; those are "hide-the-evidence-from-the-SEC" kind of numbers. And they're projecting even more growth. The article says, "Lam is forecasting $5.2 billion in revenue in the current quarter, which would be an improvement of 19% from the year-ago period." See, that's the kind of consistent growth that makes you start to wonder what's really going on. Are they cornering the market? Are they in bed with the government? Or are they just really, really good at making chip-making machines? I don't know.
But here's where it gets interesting. They estimate every $100 billion in data center investment expands their market by $8 billion. Plus, another $40 billion from upgrading existing facilities. So, they win coming and going. New factories, old factories... it's all gravy for Lam Research.
And analysts? Always behind the curve. "Analysts are scrambling to raise their earnings targets following Lam's latest report." Of course they are. They're always scrambling. If analysts actually knew what was going on, they'd be running the companies, not writing reports about them.
The article tries to sell this "attractive valuation" angle, saying it's trading at 33 times forward earnings, "in line with the tech-laden Nasdaq-100 index." Okay, but "in line" with a massively overvalued index isn't exactly a ringing endorsement. It's like saying your house is worth the same as all the other McMansions in your soulless suburb. It's still overpriced, just consistently so.
And I hate to break it to everyone, but "no-brainer investment" is an oxymoron. There's no such thing. Every investment is a gamble. Some are just slightly less stupid than others.
Look, Lam Research is probably a good buy. The numbers are solid, the market is booming, and they're selling the picks and shovels. But don't go betting your life savings on it. Remember Pets.com? Remember Beanie Babies? Hype is a dangerous drug, and the AI boom is one hell of a trip. As one article points out, This Artificial Intelligence (AI) Chip Stock Has Crushed Nvidia and Broadcom This Year. It Can Still Soar Higher.
I'm still not convinced. These "analysts" are always late to the party, and "attractive valuation" is just Wall Street code for "we need you to buy this so we can dump our shares." Lam Research might be a good company, but the whole AI thing feels like a house of cards waiting to collapse.
