From Nasdaq: 2025-02-21 04:55:00

Nvidia and Broadcom conducted 10-for-1 stock splits in 2024 to lower share prices due to substantial appreciation in the AI economy. Lesser-known AI companies Lam Research (NASDAQ: LRCX) and Arista Networks (NYSE: ANET) also split stocks to reset soaring share prices, with potential gains foreseen by analysts.

Analysts set Lam Research’s target price at $110 per share, implying a 22% upside, and Arista Networks at $145 per share, suggesting a 45% upside. Wall Street remains bullish on Lam and Arista despite skepticism, anticipating growth as AI infrastructure spending rises.

Lam Research plays a vital role in semiconductor manufacturing, specializing in deposition, lithography, and etch systems. Their strong presence in wafer fabrication equipment categories positions them well for increased AI-driven demand for semiconductors, with financial results showing growth in revenue and non-GAAP net income.

Wall Street projects Lam’s adjusted earnings to rise annually by 10% through 2026, making the current valuation slightly expensive. With Chinese customers contributing significantly to revenue, potential trade tensions could impact the stock. Investors should consider buying on a price drop of around 10%.

Arista Networks offers high-performance networking solutions for data centers, leading in high-speed Ethernet switches and focusing on network automation and security software. Despite beating fourth-quarter expectations, the stock declined post-report due to revenue shifts, highlighting the importance of diversification.

Arista’s adjusted earnings are expected to grow annually by 14% through 2026, making the current valuation of 44 times adjusted earnings seem pricey. However, historical earnings underestimations suggest a more reasonable valuation in the future. Investors with a long-term horizon should consider a small position now.

Considerations before investing in Lam Research include insights from The Motley Fool Stock Advisor team, who highlight the 10 best stocks to buy now. With historical success in stock recommendations, the team provides guidance for potential returns and long-term investment strategies, emphasizing the importance of portfolio building and regular updates.



Read more at Nasdaq: 2 Stock-Split AI Stocks to Buy Before They Soar in 2025, According to Certain Wall Street Analysts (Hint: Not Nvidia or Broadcom)