What Happened?
Shares of semiconductor equipment maker Lam Research (NASDAQ: LRCX) fell 2.5% in the afternoon session after the stock's negative momentum continued as KeyBanc Capital Markets downgraded the stock to 'Sector Weight' from 'Overweight', citing valuation concerns after a significant run-up.
The downgrade followed a period where Lam Research's shares had risen sharply and exceeded the firm's price target. Analysts at KeyBanc noted that the stock's impressive gains were driven more by its valuation increasing rather than by actual growth in its earnings. This raised concerns about whether the current stock price was sustainable. The firm also expressed that it might take time for strong memory pricing to drive demand for new tools, suggesting near-term profits may not support the stock's recent rally.
The shares closed the day at $128.34, down 2.7% from previous close.
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What Is The Market Telling Us
Lam Research’s shares are very volatile and have had 20 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 2 days ago when the stock gained 4.1% on the news that Morgan Stanley analyst Joseph Moore upgraded the company's stock from an Underweight to an Equal-Weight rating.
Alongside the rating change, the analyst significantly raised the price target on the shares to $125 from $92. This new target represented a substantial 35.87% increase, signaling renewed confidence in the company's prospects. The move from Morgan Stanley aligned with a broader positive view from Wall Street. According to data from 32 brokerage firms, Lam Research held an average recommendation that stood between a Strong Buy and a Buy, with twenty of those firms rating the stock as a Strong Buy.
Lam Research is up 77.1% since the beginning of the year, and at $128.32 per share, it is trading close to its 52-week high of $132.20 from September 2025. Investors who bought $1,000 worth of Lam Research’s shares 5 years ago would now be looking at an investment worth $3,922.
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