Applied Materials (AMAT) experienced a significant pre-market plunge of 5.36% on Tuesday, reflecting heavy selling pressure on the semiconductor equipment stock.

The sharp decline was driven by multiple negative catalysts. Renowned short seller Michael Burry publicly disclosed short positions against Applied Materials, arguing that AI semiconductor valuations have reached historically extreme levels and that the Philadelphia Semiconductor Index faces approximately 30% downside risk. Additionally, CEO Gary Dickerson recently sold a cumulative 78,321 shares of common stock between late June, cashing out over $54 million, which created further selling momentum when combined with the external short pressure.

The broader semiconductor equipment sector showed weakness in tandem, with Lam Research, KLA-Tencor, ASML, and Teradyne all experiencing declines, indicating sector-wide bearish sentiment that contributed to Applied Materials' downward movement.