NEW YORK - Shares of Applied Materials (NASDAQ:AMAT), a leading semiconductor equipment supplier, declined over 5% in early trading today following news of a U.S. Justice Department investigation. The federal probe is examining potential export violations tied to unlicensed shipments to Semiconductor Manufacturing International Corporation (SMIC), China's largest semiconductor foundry.
Despite the regulatory scrutiny, Applied Materials reported robust financial results for its fiscal fourth quarter. The company announced a net income surge to $2 billion and an earnings per share (EPS) increase to $2.12, marking a fifth consecutive year of outperformance in the market. CEO Gary Dickerson highlighted the achievement, underscoring the company's strong execution.
China played a pivotal role in the company's success, accounting for 44% of total sales. This significant contribution was driven by large shipments to a computer memory customer in China. According to the company's outlook, these shipments are expected to sustain high sales levels in China for the short term.
The U.S. has been tightening export controls to address national security concerns, with a task force established specifically to enforce these regulations. The impact of the Justice Department's investigation on Applied Materials' operations and its strong presence in the Chinese market remains to be seen as the situation develops.
InvestingPro Insights
Applied Materials, a major player in the Semiconductors & Semiconductor Equipment industry, has been making waves in the market, despite recent regulatory scrutiny. The company's robust financial performance is backed by key metrics from InvestingPro. With a market cap of $122.85B and a P/E ratio of 18.11, the firm continues to yield high returns on invested capital, a fact corroborated by an impressive return on assets of 22.78% in the last twelve months as of Q3 2023.
InvestingPro Tips highlight that the company has consistently increased its earnings per share and has a history of maintaining dividend payments, with a notable 23.08% dividend growth in the last twelve months as of Q3 2023. This strong earnings performance has allowed management to continue dividend payments, a testament to the company's financial health.
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