Short Sellers Bank Massive $5.6B Betting Against AI Stocks

Wall Street's bears just placed a $5.6 billion bet against the AI hype train—because nothing says 'rational market' like betting against the technological future.

The Skeptic's Pile

Short sellers piled into AI stocks with record positions, signaling serious doubts about current valuations. They're targeting companies riding the artificial intelligence wave—questioning whether reality can possibly match the rhetoric.

High-Stakes Contrarianism

This isn't just pocket change. We're talking institutional money making one of the largest concentrated short positions in recent memory. They're banking on cooled expectations and profit-taking after the sector's explosive run.

Timing the Tumble

Every bubble has its pin—these funds clearly think they've found theirs. They're positioning for what could be the great AI reckoning, where fundamentals finally crash the hype party.

Because when traditional finance bets against innovation, they're usually early... but rarely wrong about the interim pain.

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Furthermore, a new report from MIT’s Project NANDA found that 95% of companies using AI haven’t yet seen a return on their investment. As a result, stocks from the so-called “Magnificent Seven” have taken a hit. Meta Platforms (META) dropped 4% in the past week, while Nvidia (NVDA) fell 3.8%. At the same time, Microsoft (MSFT) and Apple (AAPL) lost nearly 3%. Alphabet (GOOGL) also declined by 1% to help short sellers earn over $2.8 billion by betting against these giants. Notably, $1.1 billion came from Meta alone, after short sellers placed $4.7 billion in bets against it last week.

Losses were even steeper among smaller AI-focused and semiconductor companies. Indeed, Advanced Micro Devices (AMD) fell more than 10%, while Broadcom (AVGO) and Micron Technology (MU) both slid over 5%. CoreWeave (CRWV), a company that builds AI data centers for Microsoft and Meta, plunged 24%. In addition, Palantir Technologies (PLTR), which had doubled in value since April, lost over 15% in its worst losing streak since March, giving short sellers another $1.6 billion in gains.

Which Magnificent Seven Stock Is the Better Buy?

Turning to Wall Street, analysts think that MSFT stock has the most room to run out of the Magnificent Seven stocks. In fact, MSFT’s average price target of $624.08 per share implies more than 23% upside potential. On the other hand, analysts expect the least from Tesla (TSLA) stock, as its average price target of $307.23 equates to a loss of 5%.