Short Sellers Just Made $6 Billion Betting Against AI Data Center Stocks

Short sellers in U.S. neocloud and AI data center stocks held about $6 billion in October paper profits through October 22, 2026, by ORTEX’s estimate. These gains are unrealized and get marked again at every close, so they can disappear quickly.

CoreWeave (NASDAQ:CRWV) fell 10.06% to $55.60 on October 22, leaving it with a $30.67 billion market value. During the session it reached $53.50, which is now the bottom of a 52-week range that tops out at $141.79. About 79.7 million shares changed hands, roughly 122% above the three-month average.

Nebius Group (NASDAQ:NBIS | NBIS Price Prediction) fell 7.23% to $159.17, a $43.63 billion market value, on the same day it announced new financing from Citi. Demand for AI computing looks strong, but investors doubt these companies can pay for the expansion that demand requires.

What Short Sellers Actually Won in October

Nebius shorts made the most in October, $2.94 billion, but for 2026 as a whole they still show a $3.33 billion paper loss. That is because the stock is still up 90.16% year-to-date.

CoreWeave shorts made close to $1.7 billion. Shorts in IREN (NASDAQ:IREN) and Applied Digital (NASDAQ:APLD) made $1.2 billion-plus between them. CoreWeave is the clearer win for shorts, since the stock is down 22.36% for 2026.

From September 30 to October 22, CoreWeave fell about 36% from $87.12. Nebius fell about 33% from $235.88 over that span.

How Crowded the Short Trade Has Become

Across the group’s five most-shorted names, short interest runs about 20% to 26% of free float. Free float refers to the shares actually available to trade. CoreWeave’s figure is 23.7%, up from 19.6% at the start of October and 22.7% in January. Nebius rose to 20% from 15.4%.

About $17 billion of stock is sold short across those names, and borrowing the shares is still cheap. Low fees let shorts hold their positions for months. The risk is that a crowded trade can reverse fast. If good news forces many shorts to buy shares back at the same time, the price jumps, and that is called a short squeeze.

Debt Math Driving the Selloff

Bernstein kept its Underperform rating on CoreWeave and cut its price target to $51 from $74. The firm estimates CoreWeave needs about $85 billion to deliver on its existing contracts. Current facilities cover about $9 billion of that, leaving roughly $76 billion to raise from outside. If the company sells stock to fill that gap, existing shareholders get diluted.

CoreWeave’s unsecured bonds recently yielded around 15%, and its 2032 notes yielded near 14.8%. Double-digit yields mean lenders see real default risk, and the bond market often signals trouble before the stock market does.

Nearly half of the data center bonds sold in 2026 are junk-rated, meaning rated below investment grade. That junk total is more than four times last year’s. Bonds linked to data centers that CoreWeave rents yield about 11% on average.

New Money That Didn’t Calm the Market

Nebius’s $3.5 billion senior secured facility from Citi will pay for data center development and GPU purchases. It charges Term SOFR, a benchmark lending rate, plus 2.75%, and that margin can rise to a maximum of 3.50%. The company’s COO, Ophir Nave, said, “This facility provides additional financing to support our near-term capacity build-out.”

The stock fell anyway. The loan matures in 364 days, so Nebius will face the refinancing question again within a year.

Can AI Data Center Stocks Close Their Funding Gap?

The most bullish voices have a stake in the result. NVIDIA (NASDAQ:NVDA) CEO Jensen Huang said at GTC Berlin that “the demand for the neoclouds is off the charts” and that the capital shortage is “going to get solved.” NVIDIA sells the GPUs these companies borrow to buy, and its own stock fell 4.40% to $212.21 on October 22.

Blackstone President and COO Jon Gray said “the underlying business is actually quite strong” and thinks CoreWeave can get through its financing pressure. He also claims compute pricing is up 50% for neoclouds that make it through. That figure is his opinion and has not been verified. Whatever happens to the neoclouds, the power, cooling, and networking suppliers behind the data centers keep collecting checks, which is why we pulled seven of them into a free report on the AI buildout.

For now, the bear case is stronger. Strong demand still leaves a $76 billion funding gap at CoreWeave, and bond yields near 15% show lenders are worried too. NVIDIA gets paid for its chips without carrying the neoclouds’ funding gap.

The next test comes with third-quarter reports, which are expected but not confirmed by the companies: IREN around November 5, CoreWeave around November 9, and Nebius around November 10. If CoreWeave closes below $53.50, or its unsecured bond yields stay near 15% after it reports, the short sellers’ case holds.

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