Market Participants Recognise Lam Research Corporation's (NASDAQ:LRCX) Earnings Pushing Shares 30% Higher

Lam Research Corporation (NASDAQ:LRCX) shares have continued their recent momentum with a 30% gain in the last month alone. The last month tops off a massive increase of 193% in the last year. After such a large jump in price, Lam Research may be sending very bearish signals at the moment with a price-to-earnings (or "P/E") ratio of 47.2x, since almost half of all companies in the United States have P/E ratios under 19x and even P/E's lower than 11x are not unusual. Although, it's not wise to just take the P/E at face value as there may be an explanation why it's so lofty. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. Lam Research certainly has been doing a good job lately as it's been growing earnings more than most other companies. It seems that many are expecting the strong earnings performance to persist, which has raised the P/E. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason. See our latest analysis for Lam Research NasdaqGS:LRCX Price to Earnings Ratio vs Industry January 10th 2026 Want the full picture on analyst estimates for the company? Then our free report on Lam Research will help you uncover what's on the horizon. What Are Growth Metrics Telling Us About The High P/E? The only time you'd be truly comfortable seeing a P/E as steep as Lam Research's is when the company's growth is on track to outshine the market decidedly. Retrospectively, the last year delivered an exceptional 47% gain to the company's bottom line. The latest three year period has also seen an excellent 32% overall rise in EPS, aided by its short-term performance. Accordingly, shareholders would have probably welcomed those medium-term rates of earnings growth. Turning to the outlook, the next three years should generate growth of 15% per annum as estimated by the analysts watching the company. With the market only predicted to deliver 12% each year, the company is positioned for a stronger earnings result. With this information, we can see why Lam Research is trading at such a high P/E compared to the market. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future. The Final Word Lam Research's P/E is flying high just like its stock has during the last month. We'd say the price-to-earnings ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations. As we suspected, our examination of Lam Research's analyst forecasts revealed that its superior earnings outlook is contributing to its high P/E. At this stage investors feel the potential for a deterioration in earnings isn't great enough to justify a lower P/E ratio. Unless these conditions change, they will continue to provide strong support to the share price. And what about other risks? Every company has them, and we've spotted 1 warning sign for Lam Research you should know about. It's important to make sure you look for a great company, not just the first idea you come across. So take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).