Is Lam Research Corp. overvalued or undervalued?

As of 24 April 2025, Lam Research Corp. has moved from a very attractive to an attractive valuation grade. The company appears to be overvalued at its current price of $91.61. Key ratios include a P/E ratio of 54, an EV to EBITDA of 44.43, and a Price to Book Value of 26.58. In comparison, Applied Materials, Inc. has a more favorable P/E ratio of 47.71 and an EV to EBITDA of 38.21, indicating that Lam Research is priced at a premium relative to its peers.
The company's strong ROCE of 61.92% and ROE of 49.02% highlight its operational efficiency, yet these metrics do not justify the high valuation multiples. Additionally, while Lam Research has outperformed the S&P 500 with a year-to-date return of 26.83% compared to 2.44%, the overall valuation suggests that the stock may be priced too high relative to its earnings potential and peer performance.