Shares of Applied Materials (AMAT) tumbled 5.20% in pre-market trading on Tuesday, extending a sharp downturn for the semiconductor equipment maker amid a broader sell-off in AI-related chip stocks. The decline comes as investor sentiment soured on concerns over corporate spending on artificial intelligence infrastructure and heightened competition from Chinese chipmakers.

The pre-market plunge was exacerbated by continued pressure from famed investor Michael Burry's publicly disclosed short position against Applied Materials and the semiconductor sector. Burry, known as "The Big Short," has been actively increasing bearish bets, projecting an approximately 30% correction across AI-related chip names. Since his initial disclosure, the sector has faced sustained selling, with Applied Materials shares falling below the $500 mark despite recent bullish analyst calls. HSBC, Citi, and UBS have all raised price targets on the stock to as high as $705, with a FactSet consensus target of $641.61, highlighting a stark disconnect between near-term bearish momentum and longer-term fundamental optimism.

The sell-off also mirrored weakness across global markets, as Nasdaq futures dropped ahead of pivotal earnings reports from tech giants including Amazon, Meta, Apple, and Microsoft. Investors are increasingly scrutinizing whether massive corporate spending on AI infrastructure is yielding adequate returns, while signs of tightening free cash flow at major hyperscalers have reignited funding concerns. Peer semiconductor equipment stocks also declined, with Lam Research and KLA-Tencor among the notable losers, underscoring the broad-based pressure on the sector.