Investing.com — TD Cowen called Lam Research Corp (NASDAQ:LRCX)its top pick, given its exposure to secular trends such as increasing memory content in storage, mobile and other applications and strong cash generation.
The company is well positioned amid a projected resurgence in NAND wafer fab equipment investments over the next two years.
Analysts at TD Cowen views underinvestment in the NAND segment during 2023 and 2024, coupled with easing restrictions on China, setting the stage for significant growth opportunities.
NAND WFE is expected to be the fastest-growing semiconductor equipment segment, with a compound annual growth rate of 28% reaching $14 billion by 2026.
This growth rate notably outpaces other areas, including Leading-Edge Foundry/Logic (11%), DRAM (3%), and Trailing-Edge technologies, which are expected to remain flat.
After a sharp decline in capital expenditures for NAND in 2023 and 2024, a strong rebound is expected as demand for high-capacity enterprise solid-state drives (eSSDs) grows and consumer electronics such as PCs and smartphones undergo refresh cycles.
“We rate LRCX Buy due to exposure to secular trends such as increasing memory content in storage, mobile and other applications; Capital intensity for dep and etch products should remain healthy,” analyst wrote.
TD Cowen has set a price target of $100 for Lam Research.