Semiconductor stocks have got off to an impressive start in 2026, as is evident from the 12.5% gains clocked by the PHLX Semiconductor Sector index as of this writing. Not surprisingly, many companies in this sector have already delivered healthy gains to investors this year.
Micron Technology (MU 2.99%) and Sandisk are the leading names in this sector, jumping 47% and 193%, respectively, so far in 2026. The two companies have benefited from strong demand for memory chips used in artificial intelligence (AI) data centers and edge devices, such as smartphones and personal computers (PCs).
However, another semiconductor stock has been crushing the broader industry in 2026 -- Lam Research (LRCX 3.55%) -- thanks to the memory boom. Let's see why that has been the case.
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Lam Research is a vital player in the global memory market
Lam Research supplies wafer fabrication equipment (WFE) to foundries and chipmakers across the globe. Though the company gets 59% of its revenue from selling foundry equipment used for manufacturing chips designed by the likes of Nvidia, Qualcomm, Apple, and others, just over a third of its revenue comes from selling memory manufacturing equipment.
The memory equipment sold by Lam Research is used for manufacturing dynamic random access memory (DRAM) -- used for transmitting huge data sets at high speeds to support processing tasks -- and NAND flash memory that's used for storing massive amounts of data. Micron and Sandisk are the key players in these segments, and both companies report that there isn't enough supply to meet the huge demand for memory chips.
Micron, for instance, sold out its capacity of high-bandwidth memory (HBM) chips used in AI chips for 2026 before the year began. As a result, it is poised to increase its capital expenditure by 45% in the current fiscal year to $20 billion, though don't be surprised to see that number rise further as the memory shortage is anticipated to persist through 2028.
Similarly, Sandisk pointed out during its recent earnings call that demand for NAND flash storage products is exceeding supply. As Sandisk, Micron, and others rush to fill the shortage, Lam stands to benefit. This is why Lam's revenue increased by 22% year over year in the second quarter of fiscal 2026 (which ended on Dec. 28, 2025) to $5.34 billion.
NASDAQ: LRCX
Key Data Points
Lam's non-GAAP (adjusted) earnings increased by almost 40% year over year to $1.27 per share. The good news for investors is that Lam anticipates its healthy growth to continue, which could help the stock sustain its market-beating run.
The stock could keep crushing the market
Lam stock appreciated 34% in 2026, and the company's guidance suggests that the rally is sustainable. Lam anticipates a 21% year-over-year increase in revenue in the current quarter, along with a 30% jump in adjusted earnings. But as the memory shortage isn't showing any signs of slowing down for the next three years, it could do better than that.
The company noted on its January earnings call that it expects 2026 wafer fabrication equipment spending to hit $135 billion, up 23% from last year. However, management indicated that the supply constraints across the broader semiconductor industry may lead to higher spending. This could set this tech stock up for stronger-than-expected growth in 2026, paving the way for more upside following an impressive start to the year.
