Two of the company’s clients are teaming up in a blockbuster buy-in.
Thanks to an earth-shaking event in the chip industry it serves so faithfully, semiconductor equipment specialist Lam Research (LRCX 3.59%) experienced a pleasant share price rise on Thursday. Bullish investors bid the company’s stock up by almost 4% in price, effortlessly beating the 0.5% gain of the S&P 500 (^GSPC 0.48%) that trading session.
A memorable day for chip companies and their suppliers
Lam Research didn’t have any news of its own to report, but we sure can’t say that about two of its chipmaking customers, Nvidia and Intel.
Image source: Getty Images.
That morning, Nvidia announced it is ponying up $5 billion to invest in a meaningful chunk of Intel’s common stock. It’s doing so, in its words, so the two high-profile tech companies can “jointly develop multiple generations of custom data center and PC products that accelerate applications and workloads across hyperscale, enterprise, and consumer markets.”
This is hardly the first big-money investment finding its way into Intel recently. No less an entity than the U.S. government announced near the end of August that it’s taking a stake worth just under $10 billion in the company, and this was preceded shortly beforehand by a similar, $2 billion move made by SoftBank.
Increased business for equipment makers
With that amount of capital gushing into Intel, the tech hardware company is sure to significantly ramp up its manufacturing efforts. This, of course, means more business for specialty manufacturing equipment companies like Lam Research. At this point, it’s hard to make meaningful estimates on this effect on the company’s fundamentals, but there’s little doubt it’ll be positive.
The bullish investor reaction to the news, then, was entirely understandable and rather justifiable.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel, Lam Research, and Nvidia. The Motley Fool recommends the following options: short November 2025 $21 puts on Intel. The Motley Fool has a disclosure policy.