Applied Materials Posts Q4 Beat, But Stock Plunges 5% on DOJ Investigation Reports

Applied Materials (NASDAQ:AMAT), the largest semiconductor equipment manufacturer in the U.S., reported fiscal fourth-quarter earnings that surpassed expectations. However, the company's shares faced pressure intra-day today, dropping more than 5%, due to reports of a criminal investigation by the U.S. Justice Department.

According to a Reuters article, citing unnamed sources, the investigation focuses on whether Applied Materials illegally shipped equipment to Chinese chipmaker SMIC via South Korea without the necessary export licenses. The report suggests that equipment worth hundreds of millions of dollars might be involved in the case.

Despite this challenging backdrop, Applied Materials announced positive financial results. The company's adjusted diluted earnings per share (EPS) for the fourth quarter was $2.12, an increase from $2.03 in the previous year. However, their revenue saw a slight decline, dropping to $6.72 billion from $6.75 billion. These figures surpassed analyst predictions, which estimated an EPS of $1.99 on revenue of $6.52 billion. The company also experienced a rise in adjusted gross margin, which increased to 47.3% from 46% a year ago.

Looking forward, Applied Materials set its fiscal first-quarter sales projection at around $6.47 billion, with a possible variation of plus or minus $400 million. The forecast for adjusted diluted EPS ranges between $1.72 and $2.08.