Buy pullback in this chip stock, Mizuho says

 Mizuho reiterated its Outperform rating on Lam Research and recommended buying the stock after an after-hours pullback following its quarterly results, in a new note to clients. The firm trimmed its price target for LRCX to $360 from $365.

Lam reported September-quarter revenue of $8.22 billion and EPS of $2.20, in line with consensus of $8.15 billion and $2.18. Gross margin rose 40 basis points sequentially to 52.4%. The company guided December-quarter revenue to $8.6 billion and EPS to $2.33, slightly above consensus.

Shares fell about 11.8% on Thursday. Analyst Vijay Rakesh noted that Lam expects wafer fab equipment spending to grow more than 29% in 2027 to over $200 billion, after rising about 42% to roughly $155 billion this year.

“We are buyers on the pullback, as new greenfield fabs, NAND/HBM/Terafab (TSLA noting Terafab “10s of $B WFE” early 2028E and $100B WFE long-term) position for upside,” Rakesh wrote.

Mizuho highlighted the emergence of SLC NAND as a major potential tailwind. Each 1 percentage point mix shift requires 2% more NAND wafer capacity, and Lam holds about 90% share of that market. In the September quarter, NAND revenue rose 38%, and foundry grew 28%.

The firm said supply constraints are easing near term, which could drive upside to Lam’s 2027 outlook. It also believes Lam sees 10 new tier 1 fabs coming online in 2027. Mizuho estimates Lam’s revenue will grow 37% next year, ahead of the 30% consensus.

“We see LRCX well positioned with: 1) wide competitive moats, 2) secular technology trends with HPC/AI/ML, HBM/CoWoS/TSV, GAA/BPD, and 3) rising capital intensity at the leading edge,” the analyst said.