After a promising development in the first half of the year Lam Research (NASDAQ:LRCX) The stock has been in a tight spot lately, losing 30% of its value since hitting a 52-week high on July 11, but the company’s recent results suggest that this dip could be a buying opportunity.

Lam released fourth-quarter fiscal 2024 results (for the three months ended June 30) on July 31, and its numbers were well above analysts’ expectations. More importantly, the semiconductor manufacturing equipment supplier’s forecast also beat Wall Street’s forecast.

Let’s take a closer look at Lam’s recent results and find out why it’s a good idea for investors to take advantage of the stock’s recent decline.

Lam Research will grow again this year thanks to AI

Lam Research reported fourth-quarter revenue of $3.87 billion, beating the consensus estimate of $3.82 billion. The company’s revenue increased nearly 21% year over year. More importantly, non-GAAP earnings per share rose an impressive 36% to $8.14, well above the analyst consensus of $7.58 per share.

However, total revenue for fiscal 2024 fell 14% to $14.91 billion and non-GAAP earnings fell 11% to $30.30 per share. Lam’s financial performance improved significantly in the final quarter of the fiscal year, and management’s guidance suggests the momentum will continue.

The company has forecast revenue of $4.05 billion for the current quarter (at the midpoint of the range), which would represent a 16% increase from the same period last year. The earnings estimate of $8.00 per share (also at the midpoint) would represent a 17% improvement from last year.

However, there is a good chance that Lam could beat its forecast as memory consumption increases due to rapidly increasing use of artificial intelligence (AI). At its last earnings call, Lam management said the company is experiencing additional demand due to an increase in investments in high-bandwidth memory (HBM) capacity.

HBM is used in data centers to handle AI workloads because of its ability to process large amounts of data while keeping power consumption low. Not surprisingly, demand for HBM is expected to grow from 478 million gigabytes (GB) in 2023 to nearly 1,700 million GB next year. As a result, memory manufacturers are dedicating more of their capacity to producing HBM chips.

Storage manufacturer SK HynixFor example, is expected to spend around $60 billion on AI-related storage investments such as HBM by 2028. SamsungHowever, it plans to triple its HBM capacity this year. Micron technology aims to more than triple its share of the HBM market by investing in new production facilities in the US and Malaysia by next year.

Strong AI-driven demand for memory chips points to long-term growth opportunities for Lam, as the company generated 36% of its total revenue from selling memory manufacturing equipment last quarter.

This solid end-market opportunity is also why analysts expect Lam’s revenue to grow 17% in fiscal 2025, followed by another solid result next year.

Data from YCharts.

Further reasons for buying the stock

We’ve already seen that Lam is on track to deliver healthy revenue growth in the current quarter and throughout fiscal 2025. Based on analysts’ earnings forecasts for the next three years, that growth should also impact the bottom line.

Data from YCharts.

Investors can still buy this AI stock at an affordable price. Lam trades at 28 times trailing earnings, while its forward earnings multiple of 22 underscores the company’s expected earnings growth. That’s cheaper than the U.S. tech sector’s average price-to-earnings ratio of 33. And given the strength of Lam’s recent results, the recent sell-off presents an attractive buying opportunity.

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Harsh Chauhan does not own any stocks mentioned. The Motley Fool owns a position in and recommends Lam Research. The Motley Fool has a disclosure policy.