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Short Sellers Profit as AI Buildout Falters
22 Oct
Summary
- Investors betting against AI data firms gained $6 billion.
- Fears of unsustainable debt fueled the recent selloff.
- Short interest in key firms reached up to 26%.
Investors who bet against US neocloud and data center companies have realized substantial paper profits amounting to $6 billion in the current month. This surge in profits stems from concerns that the extensive, debt-financed buildout of artificial intelligence infrastructure by these companies is no longer sustainable, leading to a significant selloff.
Analysis of short interest reveals significant positions against several key players. Data from analytics firm ORTEX indicates that short interest in CoreWeave, IREN, Nebius Group, Applied Digital, and Core Scientific ranged between 20% and 26% of their free float. This indicates a considerable level of market skepticism regarding the long-term viability of their current operational and financial strategies.
