Short Sellers Are Betting Against 3 AI Infrastructure Stocks—What Could Turn the Tide?

Super Micro, CoreWeave, and IREN all have heavy short interest, suggesting investors remain skeptical of AI infrastructure growth stories without clearer evidence of profit improvement. Super Micro’s DCBBS strategy, CoreWeave’s active power additions, and IREN’s contracted AI cloud revenue give each company a specific way to challenge the bear case. The trade now depends less on revenue growth alone and more on whether these companies can turn AI demand into stronger margins, cash flow and returns on capital.

Three AI companies stick out, with investors selling short a huge percentage of their public floats, indicating significant pessimism among many market participants. However, these companies also have avenues to potentially prove short sellers wrong as they look to improve profitability metrics.

Super Micro Computer: Data Center Building Blocks Solution Aims to Improve Margin Profile. Investors have sold approximately 18% of its floated shares short, making Super Micro one of the most-shorted stocks in the market. There are multiple reasons that investors may be betting on this name to fall. First off, shares are up over 30% in one month, creating more downside potential that shorts can profit from. Additionally, the company’s growth is rapid, but its profitability profile is a real concern. Analysts expect sales to grow by nearly 200% year-over-year (YOY) next quarter to almost $15 billion, but forecast a gross margin below 11%. This very low margin makes it difficult for the company to convert much of its sales into earnings. However, one key offering that could potentially help Super Micro improve its profitability over time is its data center building blocks solution (DCBBS). Super Micro describes DCBBS as a turnkey ecosystem that allows customers to build AI data centers in quarters rather than years. This comes as it integrates a wide variety of key data center components, from processors to networking to cooling systems and software. With this, it will be important to monitor mentions of DCBBS’s revenue contribution and DCBBS deal signings. Notably, the company says that the platform will soon contribute significant net income, another factor to watch.

CoreWeave Adds Record Active Power, But Profits Are Under Pressure. CoreWeave also finds itself among the list of AI stocks with very high short interest. Investors have sold nearly 17% of the company’s floated shares short. Not unlike Super Micro, the company is posting blistering growth but has profitability issues. Sales increased by 112.5% YOY last quarter to $2.575 billion, but earnings moved in the opposite direction. The company’s loss per share greatly increased to -$1.14, and free cash flow fell much further into negative territory, coming in at -$5.74 billion. Additionally, CoreWeave’s long-term debt rose by more than 270% YOY.