Short sellers make $6 billion in unrealized profits as neoclouds slide on AI debt fears

Oct 22 (Reuters) – Investors betting against US neocloud and data center companies have raked in $6 billion in paper profits so far this month, after fears their debt-fueled AI buildout was becoming unsustainable sparked a selloff. 

Short interest in CoreWeave, IREN, Nebius Group, Applied Digital and Core Scientific ranged from about 20% to 26% of their free float, according to data analytics firm ORTEX.

• Current short interest in CoreWeave stands at 23.7% of its free float, up from 19.6% at the start of the month, but slightly higher than the 22.7% seen at the beginning of 2026

• Short sellers have made close to $1.7 billion in paper profits from CoreWeave trades so far this month, after the company’s shares slumped almost 30%

• Short interest on Nebius has climbed to 20% of free float, from 15.4% at the start of 2026

• Investors betting against Nebius have raked in $2.94 billion in paper profits so far in October, though they have recorded a paper loss of $3.33 billion year-to-date

• Short sellers of data center operators IREN and Applied Digital have recorded combined paper profits of more than $1.2 billion so far this month

• Data center firm Core Scientific also had high short interest at 23.1% of its free float, with short sellers clocking $115 million in paper profits in October

• Together, about $17 billion of stock across the five companies is currently sold short and borrowing remains cheap for all of them, ORTEX said

• On Thursday, CoreWeave and Nebius shares fell more than 4% in early trading, while IREN lost 6.1%, Applied Digital shed 3.7% and Core Scientific dipped 2.4%

(Reporting by Shashwat Chauhan in Bengaluru; Editing by Jonathan Ananda)