What Happened?
Shares of semiconductor equipment maker Lam Research (NASDAQ: LRCX) fell 4.5% in the afternoon session after concerns were raised about potential supply chain disruptions for key chipmaking materials due to the conflict in the Middle East.
South Korean officials highlighted the risk, noting that the ongoing conflict could interrupt the supply of essential materials, such as helium, which are sourced from the region. Helium plays a critical role in managing heat during the semiconductor manufacturing process, and there are currently no viable substitutes. The potential for a prolonged conflict has also raised fears of higher energy costs and prices, which could create a bottleneck in the production of memory chips, a crucial component for a vast array of electronic devices and AI technologies.
Separately, reports surfaced that the U.S. was considering new restrictions on artificial intelligence (AI) chip sales. The news indicated that officials drafted regulations that would require American approval to restrict AI chip shipments globally. This development triggered a rout among chipmakers, with the S&P 500 losing 1.3% and major companies like Nvidia seeing their shares sink.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Lam Research? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Lam Research’s shares are very volatile and have had 29 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 2 days ago when the stock dropped 5.7% on the news that a sell-off in memory and storage stocks was triggered by fears that geopolitical conflict in the Middle East could cause a major energy price shock.
The catalyst originated from South Korea, where fears over the Iran conflict reignited concerns about surging liquefied natural gas (LNG) prices. As one of the world's largest LNG importers, the country's semiconductor fabs, which are key customers for Lam Research, faced concerns about rising operating costs. This was reflected in the market, as shares of memory makers SK Hynix and Samsung dropped significantly. The pressure was part of a broader market decline, with the S&P 500 and Nasdaq both falling around 2%. The sell-off in the tech sector was driven by a general move away from risk amid the geopolitical jitters and rising oil prices that stoked inflation worries.
Lam Research is up 14.9% since the beginning of the year, but at $212.72 per share, it is still trading 14.7% below its 52-week high of $249.48 from February 2026. Investors who bought $1,000 worth of Lam Research’s shares 5 years ago would now be looking at an investment worth $3,884.
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