What happened

Shares of Lam Research (NASDAQ:LRCX) rose 18.2% in June, according to data from S&P Global Market Intelligence. The semiconductor equipment stock received a boost after several promising announcements from high-profile customers during the month. These announcements portend well for customer growth, which means sales of Lam's machines and services should follow.

graphic  of a central  processing unit in a motherboard with lights illuminating transistors around it.

Image source: Getty Images.

So what

In mid-June, the world's largest semiconductor foundry, Taiwan Semiconductor Manufacturing (NYSE:TSM), announced that it would be investing $12 billion in a new advanced semiconductor manufacturing plant in Arizona. Taiwan Semiconductor will reportedly get subsidies from the U.S. government to build the site, and government subsidies could also be going to other large semiconductor manufacturers as well, as the U.S. wishes to retain leading semiconductor manufacturing capability within its borders.

Lam Research provides equipment for Taiwan Semiconductor and other large manufacturers, so the opportunity for more semiconductor manufacturing capacity (and perhaps redundant capacity) bodes well for sales of Lam's semi-cap equipment. Shares had previously been hurt by the possibility of limits on sales to China, so more domestic capacity helps counter that risk.

Then, in the final days of June, another large customer, Micron Technology (NASDAQ:MU), reported a better-than-expected quarter, gave positive guidance, and said that capital expenditures on equipment could increase in the upcoming year, after last year's big spending pullback. That should help sales in Lam's memory equipment division, which took the biggest hit in last year's trade war.

Now what

Lam actually entered June as this Fool's favorite stock, so I'm glad to see that bet pay off. Its future remains quite bright, with exponentially increasing needs for more-advanced semiconductors and memory solutions to power 5G, artificial intelligence, and the Internet of Things. Lam makes the indispensable machines that power all of these applications, so it could be a stock to buy and hold for a decade or longer, not just one good month.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.