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

Key Points

• 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.

The AI infrastructure space features many companies that are growing at a dramatic clip. However, growth alone is often not enough to satisfy many investors. Some of the fastest-growing names in this space also have among the most investors betting against them.

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

First up is AI server giant Super Micro Computer NASDAQ: SMCI. 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 NASDAQ: CRWV 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 to $27.56 billion.

For CoreWeave, it is critical that the company closes the gap between its revenue and cash flow and its capital expenditures. One factor that can help with this is bringing online its in-progress data centers as quickly as possible. This can maximize the revenue CoreWeave generates from each facility over time to offset costs.

Notably, the company added 500 megawatts of actively powered data centers last quarter, more than any quarter in its history. It now has 1.5 gigawatts of actively powered data centers, with the company targeting eight gigawatts by 2030. Investors should monitor CoreWeave’s active power additions each quarter and its ability to increase its overall active power consistently over time.

Expenditures Set to Balloon as IREN Eyes Huge Jump in Operating Run-Rate

IREN NASDAQ: IREN operates a somewhat similar business model to CoreWeave, falling in the neocloud category. However, the company has its roots in bitcoin mining and has since converted much of this infrastructure to serve the AI market. There is clearly a large cohort of investors who are skeptical of the company’s future, with nearly 28% of its floated shares sold short.

Notably, IREN has a $9.7 billion contract with Microsoft NASDAQ: MSFT. However, turning that deal into actual sales comes with execution risk and massive costs. To support this and other deployments, IREN expects to spend $25-30 billion on capital expenditures between now and Q2 2027. These figures tower over the company’s small revenue base today.

Sales came in at just $137 million last quarter, and its operating annualized run rate (ARR) revenue is $1 billion. However, the company expects to make significant progress on this front soon, targeting an increase in operating ARR to $4 billion next quarter. This comes as IREN plans to bring a large amount of data center capacity online. This would greatly increase the company’s revenue base, improving profits over time, after it posted a net loss of $684 million last quarter.

Whether IREN actually delivers on this figure will be among the most critical aspects to watch in its next earnings report. From there, the company will need to continue making strong progress in adding more capacity to maximize its data center revenue.

Short Sellers Are Targeting Growth, But Execution Will Decide the Trade

IREN’s percentage of floated shares sold short is by far the highest in this group, indicating particularly high bearish sentiment among short sellers. Interestingly, Wall Street analysts are showing the most optimism about IREN among the group. The MarketBeat consensus price target of $81.57 implies more than 80% upside.

Still, the broader takeaway is not just about IREN. Super Micro, CoreWeave, and IREN all show the same tension running through the AI infrastructure trade: demand is enormous, but investors want clearer evidence of margin expansion, cash flow improvement and disciplined capital spending.

Short sellers may be focused on the risks, but these companies still have ways to challenge the bear case. For Super Micro, that means proving DCBBS can support profitability. For CoreWeave, it means turning capacity additions into better cash flow. For IREN, it means showing that contracted AI revenue can scale fast enough to justify the spending required to support it.