Leading semiconductor fab equipment company Applied Materials (NASDAQ: AMAT) just had another wonderful year. Many of its peers were in decline in 2023 due to a severe downturn in PC and smartphone sales, which rippled through the chip manufacturing supply chain and caused lower sales of equipment used to make chips. But Applied Materials outperformed, reporting a 3% increase in fiscal 2023 revenue, a 9% increase in earnings per share, and a 65% rally in free cash flow that generated $7.6 billion (a free cash flow profit margin of 29%).

However, a Reuters news report about an ongoing U.S. investigation into Applied Materials' shipments of advanced chipmaking equipment to China in 2021 and 2022 stole the headlines. Shares briefly dipped before rallying again toward recent highs, which makes sense, given that Applied's management has already been divulging the presence of an investigation since last autumn.

Nevertheless, while I remain a very happy longtime shareholder of Applied Materials, I'm no longer calling this stock a best buy right now. After doubling in value from lows in October 2022 to the end of November 2023, there's a different reason turbulence could be coming for this top semiconductor equipment company.

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Source Fool.com