Lam Research: A Puzzling Ascent

The market, you see, is a curious beast. Advanced Micro Devices, or AMD as the optimists call it, enjoyed a rather boisterous year, leaping about like a trained poodle – a 95% ascent, they say. The PHLX Semiconductor Sector, a more dignified, if somewhat plodding, creature, managed a mere 65%. One begins to suspect a conspiracy of cheerfulness.

But ah, the fickleness of fortune! 2026 has arrived, and AMD, despite a respectable showing – a 35% revenue increase, earnings of $4.17 per share – finds itself… underperforming. A touch disappointing, wouldn’t you agree? The investors, those demanding spirits, had apparently expected miracles. They seem to believe that silicon wafers grow on trees, fertilized by the sheer force of expectation. And of course, there’s Nvidia, looming like a particularly unpleasant dream, threatening to supply Meta Platforms and Lenovo with server and laptop chips. A predictable skirmish, really; the usual jostling for position in this grand, absurd drama.

Which brings us to Lam Research. A name that doesn’t quite roll off the tongue, perhaps, but a company that is, quietly, steadily, accruing power. A most peculiar thing. Its stock has practically sprinted ahead, a 192% jump in the last year. And in 2026 alone, a further 36.8%. One might almost suspect a pact with unseen forces, though I suspect it is merely a matter of selling the tools that make the chips, rather than the chips themselves. A rather more sensible business, when you think about it. A bit like selling shovels during a gold rush – infinitely more reliable.

The secret, you see, lies in the demand for these… wafers. And fabrication equipment. The world, it seems, is insatiable for silicon. Stifel, a firm that presumably knows these things, anticipates a 10-15% increase in spending on this equipment. A modest prediction, perhaps, given the hysteria surrounding artificial intelligence. They also believe Lam Research will outpace the market. Consensus estimates concur. It’s all terribly… predictable. A 21% increase in revenue is anticipated this year, 23% next. One wonders if they’ve factored in the inevitable asteroid strike.

And then there’s the memory chip shortage. A most inconvenient truth. Lead times extending into 2028! The manufacturers, Micron and SK Hynix, are scrambling to increase capacity. The hyperscalers, those behemoths of the digital age, are preparing to spend a staggering $700 billion on AI data centers. A truly obscene sum. And Lam Research, naturally, will benefit. It’s a simple equation, really. More demand, more equipment, more revenue. One might even call it… sustainable.

A Peculiar Overtaking

AMD currently boasts a market capitalization of $320 billion. Lam Research, a mere $304 billion. A trifling difference. But consider this: Lam has demonstrably outperformed AMD. It is poised to capitalize on the AI frenzy, selling the tools that enable the chipmakers. AMD, meanwhile, is locked in a brutal competition for a share of the AI spending. A most undignified struggle. Lam, in essence, is the pick-and-shovel play, the silent beneficiary of the digital gold rush. And it trades at a significantly more reasonable 35 times earnings, compared to AMD’s exorbitant 101. A touch of sanity in a world gone mad.

This lower valuation, naturally, provides room for further upside. And, crucially, Lam doesn’t face the same competitive pressures as AMD. It is, in a sense, insulated from the chaos. Therefore, it is not entirely improbable that Lam Research will emerge as the better AI stock this year. It might even surpass AMD in market capitalization by year’s end. A peculiar outcome, wouldn’t you agree? A quiet triumph for the purveyor of tools, over the flamboyant designer of dreams. One almost feels sorry for AMD. Almost.

2026-02-27 11:52

A Peculiar Overtaking

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