In 2024, stock-split fever has taken hold among many investors. The sheer volume of stock splits, with over 450 forward and reverse stock splits year to date, is quite remarkable. And there are more splits on the horizon in the coming weeks.

Big Winners and a Disappointment

Several stocks of companies that have already split this year have seen significant gains. Take Microstrategy, for instance, whose shares have skyrocketed by over 420%. Nvidia has also soared around 190%. However, there is one stock-split stock that has been a disappointment this year. But according to Wall Street, it could potentially crush the market in the next 12 months.

Meet Lam Research

Lam Research (LRCX -6.34%) conducted a 10-for-1 stock split after the market close on Oct. 2, 2024. In May, as a semiconductor fabrication equipment provider, it announced plans for the stock split along with a $10 billion stock buyback. CFO Doug Bettinger stated that the stock split would allow a larger proportion of Lam's worldwide employee base to participate in the company's employee stock plans. In the weeks following the announcement, the stock price took off. But then in July, it began to decline and is now roughly 36% below its peak.Despite this, Wall Street remains optimistic about Lam Research. The average 12-month price target for the stock indicates an upside potential of 29%, which is much more bullish than the predictions for the S&P 500. Goldman Sachs expects the S&P to rise around 9% over the next 12 months, while Evercore ISI anticipates a gain of around 12% by mid-2025. On the other hand, Stifel analysts predict a steep S&P 500 sell-off.Among the 32 analysts surveyed by LSEG in November, 16 rated Lam Research as a "buy" and four as a "strong buy". The other 12 analysts recommend holding the stock. None of the surveyed analysts saw Lam as a stock to sell. Even the most pessimistic price target for Lam was higher than its current share price.

Why Analysts Like Lam Research

We don't need to speak with the 20 analysts who rated Lam as a "buy" or "strong buy" to understand why they like the stock. It mainly comes down to the company's growth prospects. Spending on NAND flash memory is still in a slump, but Wall Street expects a rebound, and Lam is confident about it. CEO Timothy Archer mentioned in the company's third-quarter earnings call that technology updates should boost NAND investments. He predicted that more customers will switch to advanced nodes in 2025. Archer added that with the industry's largest installed base of 3D manned equipment, Lam should benefit disproportionately during these upgrades.Lam could also expand its market share in advanced extreme ultraviolet lithography (EUV) patterning next year. This EUV patterning is used to print layers on silicon wafers for semiconductor chips. Additionally, Lam has emerged as a leader in advanced packaging, which combines multiple chips to enhance performance and reduce costs.I believe analysts are generally positive about Lam Research's valuation as well. The stock's price-to-earnings-to-growth (PEG) ratio based on five-year earnings growth projections is 1.44. Although it's not a bargain valuation, it is lower than the 1.72 PEG multiple of Lam's top rival, Applied Materials (AMAT -9.20%).

Risks and Outlook

Lam faces some risks. China, which accounted for 37% of the company's total revenue in Q3, can be a volatile market. The possibility of steep tariffs on imports to the U.S. could have a financial impact on Lam.Nevertheless, I expect the demand for NAND flash memory to rebound, just as it has in the past. Lam is well-positioned to benefit from this. Whether the stock jumps 29% over the next 12 months or not, it should be a solid long-term winner.