What Happened?
Shares of semiconductor equipment maker Lam Research (NASDAQ:LRCX) fell 4.3% in the afternoon session after the U.S. government tightened restrictions on the use of American semiconductor manufacturing equipment in China.
The U.S. Commerce Department revoked authorizations that had allowed chipmakers Samsung and SK Hynix to receive U.S. equipment for their Chinese facilities. Under the new rules, these companies will now need to obtain specific licenses for such purchases. This policy change is expected to reduce sales for American semiconductor equipment makers like Lam Research, KLA Corp, and Applied Materials. The stock's drop also came amid a wider sell-off in the technology sector, as disappointing guidance from other tech firms like Dell and weak data center revenue from Marvell Technology contributed to negative market sentiment.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Lam Research? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Lam Research’s shares are very volatile and have had 20 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 17 days ago when the stock gained 3% on the news that the semiconductor sector rallied in intraday trading as a favorable inflation report bolstered investor hopes for a potential Federal Reserve interest rate cut. The latest Consumer Price Index (CPI) data showed a slowdown in inflation, fueling a broad market rally that pushed the S&P 500 and Nasdaq to new all-time highs. For the capital-intensive semiconductor industry, the prospect of lower interest rates is particularly welcome, as it can reduce borrowing costs for expansion and research and development. The positive macroeconomic sentiment provided a significant tailwind for the entire sector, as investors anticipate that a more accommodative monetary policy from the central bank will stimulate economic growth and demand for technology.
Lam Research is up 37.6% since the beginning of the year, and at $99.71 per share, it is trading close to its 52-week high of $107.38 from August 2025. Investors who bought $1,000 worth of Lam Research’s shares 5 years ago would now be looking at an investment worth $2,965.
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