The jury is out on whether the Fed will be able to engineer a so-called soft landing; we’ll let others debate recession semantics, as we think any economic contraction will be mild and we like the long-term prospects of our holdings, explains John Buckingham, money manager and editor of The Prudent Speculator.

Lam Research (LRCX) is a manufacturer and designer of semiconductor processing equipment used in the making of integrated circuits. The company’s sales are weighted towards memory manufacturers (which can create big swings in the stock price), while smaller portions of total revenue come from silicon foundries and integrated device manufacturers.

Lam posted fiscal Q4 EPS of $8.83, crushing expectations of $7.26, while revenue of $4.63 billion also came in well ahead of the consensus. The highest in Lam’s history, revenue was driven by strong results from foundry logic systems and customer service business segments, as well as operational success maneuvering around supply chain constraints.

LRCX expects robust semiconductor demand with few pockets of weakness, expanding semiconductor usage, rising device complexity and larger die sizes. Lam spent $868 million on share repurchases last quarter and paid $208 million in dividends.

For the current quarter, LRCX expects $4.9 billion of revenue (+/- $300 million) and $8.75 to $10.25 of EPS. With a forward P/E ratio less than 14, the volatile share price (off 30% this year) offers a nice entry point.

Despite reporting fiscal Q3 top- and bottom-line results that were better than expectations, semiconductor designer Qualcomm (QCOM) saw its shares fall as concerns about weakening global mobile phone demand and lowered Q4 guidance took their toll.

The company reported adjusted EPS of $2.96 on revenue of $10.94 billion, versus the respective consensus estimates of $2.87 and $10.87 billion. Q4 guidance was weaker than expected with revenue at $11.4 billion, vs. the Street’s $11.9 billion expectation and EPS of $3.15, vs. the $3.26 consensus.

Nevertheless, we were pleased to see QCOM’s robust outlook and expect to see continued execution momentum. Shares have slumped more than 23% this year, but we think the prospects for the company are bright, especially as high-quality chips are difficult to find.

We were also happy to see a new agreement with Samsung, which expands Qualcomm’s chipset market share within Galaxy devices. Samsung also extended the company’s licensing agreement until 2030 and into 6G.

The deflating handset demand is a near-term risk, but we believe it is already reflected in expectations (with shares off 25% since early January highs) and we remain confident in the company’s long-term revenue opportunities and diversification strategy beyond handsets. QCOM shares change hands at 11.5 times next 12-month adjusted EPS and offer a 2.1% dividend yield. Our target price has been adjusted to $224.

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