AMD, KLA Corp., Lam Research reiterated Outperform at Raymond James
Jun. 07, 2024 9:39 AM ET
By: Chris Ciaccia, SA News Editor
 Andrei Berezovskii/iStock Editorial via Getty Images
AMD (NASDAQ: AMD), KLA Corp. (NASDAQ: KLAC) and Lam Research (NASDAQ: LRCX) were in focus on Friday as Raymond James reiterated its Outperform rating on the trio of semiconductor companies after a meeting with several semiconductor companies in Silicon Valley.
The investent firm raised its price target on KLA Corp. to $875 fro $750 and boosted its target on Lam Research to $1,060 from $950. KLA Corp. shares were slightly lower in early trading while Lam Research and AMD ticked up slightly.
"Not surprisingly, AI was the primary focus during our discussions," analyst Srini Pajjur wrote in an investor note. "Overall business conditions appear stable, and managements were generally optimistic about Data Center demand heading into 2H. Traditional server refresh was another topic of interest in our meetings given the aging installed base. From an equipment standpoint, HBM spending continues to be strong, advanced logic is recovering, and China demand appears relatively stable."
AMD
AMD management said the MI300 ramp at leading customers is "going well" and appears to have a line of sight that it could surpass its forecast of $4B in artificial intelligence-related revenue this year.
"Management emphasized that prior comments related to supply tightness were not specific to the company and were related to industry-wide trends," Pajjur wrote. "AMD is working with multiple Memory suppliers and management believes that higher HBM capacity gives the company an added TCO advantage. AMD is currently engaged with more than 100 customers for MI300 although a bulk of the $4B+ forecast for this year is driven by large customers."
The company also reiterated its view that the "worst is behind" it in the embedded and gaming markets, with sequential growth expected in the second-half of the year.
"Embedded should continue the recovery into 2025 while management’s current expectation for Gaming is to be relatively flat in 2025," Paijur wrote.
KLA Corp.
KLA Corp. management said it expects China revenue to be "relatively flat" in the second-half of the year and "relatively stable" in 2025.
"KLAC has a dominant share in infrastructure (wafer houses & mask houses), which appears to be helping as China builds its domestic infrastructure," Paijur wrote. "Longer term management expects China to return to historic levels of mid 20% of sales range but largely due to a recovery in other markets and geographies."
Management also reiterated its view that advanced foundry and logic is starting to improve and that data and software are helping boost margins.
Lam Research
Like KLA Corp., Lam's management also said that China is "broadly stable" and there should be "healthy spending trends" well into 2025.
"While competition from domestic tool makers is increasing, we believe Lam maintains a significant advantage in terms of yields, R&D, and customer base," Paijur wrote.
High-bandwidth memory is seen as a "multi-year" tailwind for the company, while 3D dynamic random access memory is a "significant long term opportunity," albeit one that could take a few years to generate meaningful revenue.
Lam is also on track to ship more than $1B in gate-all-around nodes this year, Paijur said, adding that its progress in the foundry market is "underappreciated."
"Looking ahead, we believe TSM’s N2 node offers a sizable opportunity for the company," Paijur wrote. |
