Lam Research stays top semi pick at Morgan Stanley as macro concerns remain
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Lam Research (NASDAQ:LRCX) is still the top semiconductor pick at Morgan Stanley and the investment firm likes semiconductor capital equipment stocks as the firm has reduced its exposure in the space, particularly to lower valuation names due to ongoing macro concerns, it said in a note.
A team of analysts, led by Joseph Moore, noted that Lam has "sold off materially" in recent weeks, but it still is a beneficiary from localized spending due to geopolitical uncertainty. It also offers "elevated intermediate term visibility," though the team noted that any short term supply issues that could cause fluctuations are "transitory in nature."
The analysts also noted that the firm cut its exposure to lower valuation stocks such as Intel (INTC), Qorvo (QRVO) and Teradyne (TER), while upgrading Global Foundries (GFS) as a "hedge against global uncertainty." 
Going forward, the firm prefers stocks that have exposure to product cycle growth drivers, as well as "equipment over devices given tensions that are driving spending higher, and want to be sensitive to through-cycle valuation levels."
The firm caveated that if the U.S. or globe were to go into a recession, no stocks would be "immune" to that particular outcome, but if that doesn't happen and growth just slows, most companies will have "good numbers but that the higher multiples would come down amid rate concerns."
Morgan Stanley noted that it "doesn't really seem to matter" if companies say positive things, but negative data points, including in China and some comments out of Europe are "meaningfully amplified."
Last week, Lam Research (LRCX) was added to Citi's U.S. Focus List, noting it has several positives going for it, including an attractive valuation.