By Elsa Ohlen
Lam Research stock was rising after the semiconductor equipment maker signaled to jittery tech investors that all is still well with demand for advanced AI chips.
Late Wednesday, the company posted adjusted earnings of 91 cents a share on revenue of $4.38 billion for the quarter, beating expectations for earnings of 88 cents a share on revenue of $4.32 billion, according to FactSet.
It sees revenue for the March quarter coming in around $4.65 billion, plus or minus $300 million, also above analysts' consensus call.
Shares rose 5.2% to $79.09 in premarket trading Thursday. Futures tracking the Nasdaq were up 0.4%.
Lam CEO Tim Archer said the demand for higher chip performance is a good sign for the company, as it would create a greater need for its equipment.
Earlier this week, investors got a wake up call in the form of a low-cost AI model out of China. It put markets on edge as it raised the question of whether the U.S. AI dominance was at risk.
Lam's earnings report was another piece of good news for investors who are grasping for signs that they haven't overinvested in AI. Late Tuesday, peer ASML posted blowout earnings, strong bookings and said demand for AI-related products remains healthy.
Lam shares have fallen about 10% over the past year amid soft China sales, but the company seems to be through the worst, according to Jefferies analysts led by Ezra Weener. The analysts hiked their price target on shares to $95 from $90 and reiterated a Buy rating.
While any potential shift in demand or lower spending on AI products following the DeepSeek drama would take time to show up in the balance sheets of chip equipment makers, for now, investors seem to be OK with holding on to their chip stocks.
Write to Elsa Ohlen at elsa.ohlen@barrons.com
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January 30, 2025 07:30 ET (12:30 GMT)
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