Lam Research Corporation (LRCX)

Lam Research is one of the world's largest semiconductor equipment companies, specializing in etch and thin-film deposition systems that are critical to manufacturing the most advanced AI chips. Every leading-edge AI processor — from NVIDIA's Blackwell GPUs to AMD's MI400 and Google's TPUs — requires hundreds of etch and deposition steps during fabrication. Lam's equipment creates the intricate nanoscale transistor structures and interconnects that define chip performance. As AI chips push to 3nm, 2nm, and beyond, manufacturing complexity increases dramatically, requiring more Lam equipment per wafer.

The AI chip boom has created a structural demand supercycle for semiconductor equipment. TSMC, Samsung, and Intel are collectively investing over $150 billion annually in fab capacity expansion, with a significant share directed at advanced nodes for AI chip production. Lam Research benefits from this capex wave through both new equipment sales and its growing installed base services business, which generates recurring revenue from maintenance, upgrades, and spare parts. The company's CSBG (Customer Support Business Group) now represents approximately 30% of revenue and provides stability through cyclical downturns. With the transition to gate-all-around (GAA) transistors and backside power delivery, the number of etch and deposition steps per wafer is increasing, expanding Lam's content per unit.