Key Highlights

  • Lam Research finished among the top gainers in the Nasdaq-100 on Friday, with no company-specific news found, as makers of wafer-fabrication equipment rode a broad semiconductor rally.
  • The company is especially tied to memory chips, since its tools are used heavily in making DRAM and NAND flash, areas Dell management has described as the key constraint in AI servers.
  • Not every storage name rallied: Seagate and Western Digital plunged after a report said Toshiba plans to double its hard-disk-drive production capacity, though that selloff stayed confined to hard-drive makers.
  • The Nasdaq-100 closed at a record 30,807.93, though Treasury yields reversed to close higher after an early drop, with the 10-year near its highest level since 2002.

Lam Research (NASDAQ:LRCX) shares climbed on Friday, October 2, as makers of wafer-fabrication equipment were swept up in a broad semiconductor rally sparked by a weak US jobs report. No company-specific news was found for Lam Research. The California-based company supplies the etch and deposition machines that chipmakers use to build up and carve out the microscopic layers on silicon wafers. It finished among the top gainers in the Nasdaq-100.

A Wave Across the Chip Sector

Lam's gain was one of many in a sector-wide surge. Teradyne was the best performer in the S&P 500, while Arm Holdings, Monolithic Power, Microchip Technology, Texas Instruments, KLA, Intel and AMD all jumped on the Nasdaq-100. Equipment peer ASML also climbed, as did NXP Semiconductors and Marvell Technology.

Market commentary grouped Lam with Analog Devices, AMD, KLA and Marvell as chip stocks lifted by falling rate-hike odds.

Nvidia, the leader in AI chips, hit a record high during the session after Morgan Stanley named it its top semiconductor pick.

Why Memory Matters for Lam

Lam is especially tied to memory chips, since its tools are used heavily in making DRAM and NAND flash. Memory has become a bottleneck in the AI build-out. Dell management described the constraints on its AI-server Business bluntly: the constraints remain the same, DRAM, DRAM, DRAM, followed by NAND, NAND, NAND.

Tight memory Supply can encourage chipmakers to invest in new capacity, which in turn means more orders for equipment makers like Lam. Dell, for its part, climbed on Friday on its record $95 billion AI-server backlog, a figure that illustrates the scale of Demand the memory industry is trying to serve.

Not every storage name rallied, however. Seagate and Western Digital plunged after a report said Toshiba plans to double its hard-disk-drive production capacity. That selloff was largely confined to hard-drive makers; memory chip stocks such as Micron barely moved.

The Rate Trigger

The day's catalyst was the September jobs report. The US added just 29,000 jobs, far below the roughly 84,000 expected, and revisions removed 60,000 jobs from July and August. The Unemployment rate ticked up.

The Federal Reserve raised rates on September 16 for the first time since 2023, after the war with Iran pushed oil prices and Inflation higher. The jobs data cut the odds of another hike at the October 27-28 meeting, although they partly recovered into the close.

Fifth Third economist Bill Adams said the Fed's next decision in late October is live.

The Nasdaq-100 closed at a record 30,807.93, up 306.37 points. But Treasury yields reversed to close higher after an early drop, with the 10-year near its highest level since 2002, a reminder that the rate backdrop remains unsettled.

Memory Spending Will Be the Key Signal

ASML's third-quarter results in mid-October will offer the first major read on equipment demand this Earnings season, with obvious read-across for Lam. Investors will watch for signs that memory makers are lifting spending to ease supply constraints. Broader earnings season begins with PepsiCo on October 8 and Delta on October 9, followed by the big banks on October 13 and 14. Analysts expect strong double-digit earnings growth for the S&P 500 in the third quarter. The Federal Reserve's October 27-28 meeting is the key macro event for chip stocks.