Key Points
Lam Research stock has risen 145% this year to a record $177, driven by high demand for memory chips in AI data centers.
CEO Tim Archer sold 163,000 shares for nearly $27 million on December 17, exercising incentive stock options.
Lam’s sales grew nearly 30% and profits rose almost 45% in the September quarter, with memory chip spot prices up 250%.
Memory chips are in short supply as artificial-intelligence models demand ever larger data centers. Lam Research makes the etchers and other systems that will be needed to boost chip production, so its stock is up 145% this year to a record high of $177.
That made last week a rewarding time for CEO Tim Archer to sell stock under his 10b5 trading plan. His Dec. 17 sale of 163,000 shares brought him nearly $27 million after exercising incentive stock options priced as low as $18 apiece.
The company didn’t respond to Barron’s questions about the CEO’s trading. A 10b5 plan addresses concerns about executives’ inside information by fixing the timing, price, or amount of stock sales in advance.
Archer has earned his stock compensation. He’s kept Lam at the forefront of technologies needed to deposit and etch the hundreds of layers in today’s high-performance memory chips. Sales grew nearly 30% in the September quarter, while profits rose almost 45%.
Since September, spot prices for high-end memory chips have jumped 250%, Morgan Stanley’s Erik Woodring wrote last week. Lam customers need to upgrade their existing capacity and, of course, add to it.
“The memory market is going through a once in several decades ‘supercycle’,” Woodring wrote.
Lam’s stock chart has moved up and to the right for nearly a decade. Unless we’re all wrong about this AI thing, that trend will persist. Three-fourths of the analysts who follow Lam rate it a Buy.
The stock has experienced a few short-term setbacks in the last couple of years when the White House’s export policies threatened tech sales to the Asian nations that buy 90% of Lam’s gear. CEO Archer has been lucky in making his 10b5 plan stock sales ahead of these tech-stock air pockets.
Archer’s $31 million sale on June 28, 2024, came two weeks before Lam stock and other chip names fell by a third on worries that President Joe Biden would restrict tech sales to China. Archer’s next sale of $5 million worth came at the end of February 2025, before Lam stock retreated 25% on President Donald Trump’s April 1 reciprocal tariff announcement. The setback was short-lived.
With the U.S. and China trading again, there’s little reason to fear that Archer’s big sale this month will be followed by another Lam stock setback. If that happens, it will be a buying opportunity.