Shares of Applied Materials (AMAT) are down 7% on news that the technology company is being investigated by the U.S. Justice Department over sales it made to China.
The Reuters News Agency reported that Applied Materials is under criminal investigation by the Justice Department for sending its semiconductor equipment to a Chinese company without the needed licenses and approvals.
News of the Justice Department probe broke just as Applied Materials issued its latest financial results and overshadowed what was a strong print from the company.
Applied Materials reported earnings per share (EPS) of $2.12 U.S., which beat the consensus estimate of $1.99 U.S. among Wall Street analysts.
Revenue in the quarter came in at $6.70 billion U.S., which was also above analysts’ expectations of $6.50 billion U.S.
Applied Materials also forecast a range of potential revenue for the current quarter with a midpoint of $6.50 billion U.S. That compares with the consensus view of $6.40 billion U.S.
However, analysts and investors chose to focus on news of the Justice Department investigation and bid the stock down in after hours trading.
Applied Materials disclosed back in October 2022 that it had received a subpoena from the U.S. Attorney’s Office for the District of Massachusetts requesting information relating to certain China customer shipments.
The company said over a year ago that it is “…cooperating fully with the government.”
On its earnings call, Applied Materials’ executives declined to provide more details on the government probe, saying they had already disclosed it and addressed the matter.
Before today (Nov. 17), Applied Materials’ stock had gained 60% on the year and was trading at $154.81 U.S. per share.