Step 1: Describe the arrangement.
Three identical solid spheres, each of mass $M$ and radius $R$, are stacked so the axis $YY'$ passes through the centre of the top sphere, while the two lower spheres touch it on either side.
Step 2: Recall a sphere's moment of inertia.
About a diameter through its own centre, a solid sphere has $I_{cm} = \dfrac{2}{5}MR^2$.
Step 3: Handle the top sphere.
The axis goes through its centre, so $I_1 = \dfrac{2}{5}MR^2$.
Step 4: Use the parallel axis theorem for the lower spheres.
Each lower sphere's centre is a distance $R$ from $YY'$, so $I = \dfrac{2}{5}MR^2 + MR^2 = \dfrac{7}{5}MR^2$.
Step 5: Account for both lower spheres.
By symmetry each contributes $\dfrac{7}{5}MR^2$, giving $\dfrac{7}{5}MR^2 + \dfrac{7}{5}MR^2$.
Step 6: Add all three.
$I = \dfrac{2}{5}MR^2 + \dfrac{7}{5}MR^2 + \dfrac{7}{5}MR^2 = \dfrac{16}{5}MR^2$, which is option (1).
\[ \boxed{I = \frac{16}{5}MR^2} \]