Synopsis

Short sellers betting against US neocloud and data centre companies have made about $6 billion in paper profits this month as AI debt fears trigger a sharp selloff. CoreWeave, Nebius, IREN, Applied Digital and Core Scientific face heavy short interest, highlighting growing concerns over debt-fuelled AI infrastructure spending.

Short sellers betting against US neocloud and data centre companies have accumulated about $6 billion in unrealised profits this month as concerns over debt fuelled AI spending trigger a sharp selloff across the sector, Reuters reported.

The pressure has been particularly strong in companies seen as major beneficiaries of the AI infrastructure boom, with investors increasingly questioning whether aggressive data centre expansion can be supported by rising debt.

CoreWeave, Nebius face heavy short bets

Short interest in CoreWeave, IREN, Nebius Group, Applied Digital and Core Scientific stood between about 20% and 26% of their free floats, according to data analytics firm ORTEX, cited by Reuters.

CoreWeave has seen its short interest rise to 23.7% of free float, from 19.6% at the start of October. Short sellers have made nearly $1.7 billion in paper profits from the stock this month after its shares fell almost 30%.

Nebius has also attracted heavier bearish bets, with short interest reaching 20% of its free float, compared with 15.4% at the start of the year. Investors betting against the company have made $2.94 billion in paper profits in October, although they remain down $3.33 billion on a year to date basis.

Data centre stocks face broader pressure

Short sellers of IREN and Applied Digital have together made more than $1.2 billion in paper profits this month, while bearish bets against Core Scientific have generated another $115 million, Reuters reported.

Across the five companies, around $17 billion worth of stock is currently sold short, ORTEX said. Borrowing also remains cheap for all five, potentially allowing bearish positions to remain in place.

The selling continued on Thursday. CoreWeave and Nebius fell more than 4% in early trading, while IREN dropped 6.1%, Applied Digital declined 3.7% and Core Scientific slipped 2.4%.

The moves highlight how quickly sentiment around AI infrastructure stocks can turn when investors begin questioning the economics of rapid, debt backed expansion.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)

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