Lam Research (LRCX) is offering a less favorable setup than

Applied Materials (AMAT) following its recent share price outperformance, KeyBanc said in a Monday note.

The report said investor optimism toward memory end markets, a more favorable view on Lam's competitive positioning, and AI-related releases had helped drive the sizable share price rise.

"That said, we don't think that a corresponding increase in consensus expectations or actual earnings power is imminent," the note said.

"Given the increase has been driven more by multiple expansion than incremental earnings growth, we see share price sustainability as at risk," the report added.

For investors wanting exposure, KeyBanc analysts said Applied Materials is offering a more favorable risk/reward profile at a more reasonable valuation.

KeyBanc downgraded Lam Research to sector weight from overweight, while raising its price target for Applied Materials to $220 from $200 and keeping its overweight rating.

Price: 132.61, Change: +0.41, Percent Change: +0.31