Lam Research Corporation (LRCX) Stock Valuation — DCF Analysis
Semiconductors · NASDAQ
Current Price
$366.81
Intrinsic Value
$272.92
-34.4% margin of safety
COMPETITIVE MOAT
↑Proprietary Technology & IP
LRCX's advanced wafer fabrication equipment relies on deep engineering expertise and extensive intellectual property. This creates high barriers to entry for competitors seeking to replicate their complex solutions.
↑Customer Lock-in & Switching Costs
Semiconductor manufacturers invest heavily in LRCX's equipment, integrating it into their production lines. The cost and complexity of switching to a competitor's technology are substantial, fostering customer loyalty.
↑Scale & R&D Investment
LRCX's significant scale allows for massive R&D investments, driving continuous innovation. This ensures they remain at the forefront of semiconductor manufacturing technology, a critical advantage.
INVESTMENT RISKS
↓Geopolitical & Trade Restrictions
Export controls and geopolitical tensions, particularly concerning China, can disrupt LRCX's supply chain and limit access to key markets. This poses a significant threat to revenue streams.
↓Cyclical Semiconductor Industry
The semiconductor industry is inherently cyclical, with periods of high demand followed by downturns. LRCX's performance is tied to these industry cycles, leading to potential revenue volatility.
↓Intense Competition
While LRCX has strong moats, the semiconductor equipment market is highly competitive. Rivals like ASML and Applied Materials constantly innovate, pressuring market share and margins.
Base case
LRCX base case valuation
A base case discounted cash flow model for LRCX estimates an intrinsic value of about $272.92 per share, against a current price of $366.81. The model assumes 20.0% annual free cash flow growth, a 10.0% discount rate, and a 30x exit multiple.
Intrinsic Value
$272.92
Margin of safety
-34.4%
Expected annual return
-5.7%
Base case assumptions: 20.0% annual growth, 10.0% discount rate, 30x exit multiple, 5 year projection. Data as of 2026-06-12.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the LRCX valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for Lam Research Corporation respond.
Open DCF Calculator for LRCXCompany Overview
Lam Research Corporation is a prominent supplier of equipment vital for semiconductor processing, encompassing its design, production, sales, repair, and ongoing maintenance. These sophisticated systems are fundamental for the creation of integrated circuits. The company's extensive product catalog features a variety of deposition technologies. For tungsten metallization, they provide ALTUS systems that deposit conformal films. SABRE products excel in electrochemical deposition, crucial for copper interconnect transitions and enabling copper damascene manufacturing. SOLA utilizes ultraviolet thermal processing for film treatments, while VECTOR delivers plasma-enhanced chemical vapor deposition (CVD) and atomic layer deposition (ALD) solutions. Furthermore, SPEED addresses gapfill applications with its high-density plasma CVD products, and Striker is engineered for single-wafer atomic layer deposition of dielectric films. Beyond deposition, Lam Research offers a comprehensive suite of etching tools. Flex is designed for dielectric etch applications, Kiyo handles conductor etch processes, Syndion specializes in through-silicon via etching, and Versys metal products are used for metal etch processes. The company's offerings also extend to specialized solutions like Coronus, which enhances die yield through bevel cleaning. For various wafer cleaning requirements, Lam Research supplies multiple product lines, including Da Vinci, DV-Prime, EOS, and SP series. Additionally, Metryx mass metrology systems provide precise, in-line mass measurement capabilities for semiconductor wafer manufacturing. Lam Research serves the global semiconductor industry, distributing its technologies and services across the United States, China, Europe, Japan, Korea, Southeast Asia, Taiwan, and other international markets. Established in 1980, the company maintains its corporate headquarters in Fremont, California.
Financial Metrics — LRCX Stock Valuation Data
Revenue/Share (TTM)
$17.35
FCF/Share (TTM)
$5.16
ROIC (TTM)
42.8%
ROE (TTM)
65.8%
P/FCF
71.1x
EV/EBITDA
57.3x
FCF Yield
1.41%
Debt/Equity
0.35x
Based on trailing twelve-month data, LRCX shows a free cash flow per share of $5.16 and a ROIC of 42.8%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 71.1x and FCF yield of 1.41% are important context metrics when evaluating LRCX's stock valuation relative to peers.
Frequently Asked Questions
What is the intrinsic value of LRCX?
Lam Research Corporation currently generates $5.16 in free cash flow per share. At the current price of $366.81, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is LRCX undervalued?
LRCX trades at a P/FCF ratio of 71.1x with a free cash flow yield of 1.41%. This elevated P/FCF suggests the market is pricing in significant future growth. However, whether LRCX is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value LRCX stock using DCF?
To perform a DCF valuation on Lam Research Corporation: (1) Start with the trailing free cash flow per share ($5.16) as the base, (2) project future FCF growth over 5-10 years based on Semiconductors industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting LRCX's risk profile — with a debt-to-equity of 0.35x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to LRCX?
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Lam Research Corporation, this means projecting how much free cash flow the company will produce over the next 5-10 years, shaped by Semiconductors trends, then discounting those amounts to today's dollars. LRCX's ROIC of 42.8% indicates strong capital efficiency, which supports higher growth assumptions in the DCF model.
How does WACC affect LRCX stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For LRCX, with a debt-to-equity ratio of 0.35x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 57.3x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See LRCX PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Technology valuationsDCF and P/E value LRCX with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-06-12. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.