Is Lam Research Corp. overvalued or undervalued?

As of 30 July 2025, the valuation grade for Lam Research Corp. has moved from attractive to very attractive, indicating a strong positive outlook. Based on the available metrics, the company appears to be undervalued. The P/E ratio stands at 54, which is higher than peers like Applied Materials, Inc. at 45.37 and Parker-Hannifin Corp. at 37.22, suggesting that while Lam Research is priced at a premium, its growth potential may justify this valuation. Additionally, the EV to EBITDA ratio of 44.43 is also notable, especially in comparison to GE Aerospace's significantly higher ratio of 127.43, reinforcing Lam Research's relative value.
Furthermore, Lam Research boasts impressive returns on capital and equity, with ROCE at 61.92% and ROE at 49.02%. These figures highlight the company's efficiency in generating profits relative to its equity and capital employed. The stock has significantly outperformed the S&P 500, with a year-to-date return of 74.89% compared to the index's 12.22%, further supporting the narrative of an undervalued stock with strong growth prospects.