Applied Materials Beats Fourth-Quarter Estimates, But Stock Falls On U.S. Criminal Probe
Applied Materials (AMAT) reported better-than-expected earnings and revenue for its fiscal fourth quarter and provided an outlook that topped analysts’ estimates for the current period. However, the company’s stock fell in after-hours trading on a report of a U.S. criminal investigation into its exports to China.
The Santa Clara, Calif.-based company earned an adjusted $2.12 a share on sales of $6.72 billion in the quarter ended Oct. 29. This beat Wall Street’s expectations for earnings of $1.99 a share on sales of $6.52 billion. Despite a slight dip in sales, Applied Materials’ earnings rose 4% on a year-over-year basis.
For the current quarter, Applied Materials expects to earn an adjusted $1.90 a share on sales of $6.47 billion. However, the company’s positive report was overshadowed by a Reuters report that it is under a U.S. criminal investigation for potentially evading export restrictions on China’s top chipmaker, SMIC.
According to sources, the Justice Department is probing Applied Materials for sending hundreds of millions of dollars of equipment to SMIC without export licenses. The U.S. has restricted shipments of advanced semiconductors and chipmaking gear to China for national security reasons.
Following the news report, AMAT stock dropped more than 7% in after-hours trading to 143.76 on Thursday. It closed the regular trading session at 154.81, down 0.4%. On November 10, the company’s stock broke out of a double-bottom base at a buy point of 148.40.
Despite the stock’s decline on Thursday, Applied Materials ranks fourth out of 27 stocks in IBD’s semiconductor equipment industry group and has an IBD Composite Rating of 92 out of 99. It is also on the IBD Tech Leaders list.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software, and semiconductor stocks.
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