AI debt fears lift neocloud short sellers’ paper gains to $6bn

Short sellers targeting five US neocloud and data centre companies have accumulated about $6 billion in paper profits in October as concerns over debt-financed artificial intelligence infrastructure spending weigh on shares. Economic Times Markets, citing Reuters and analytics firm ORTEX, reported the figures on October 22.

CoreWeave, Nebius Group, IREN, Applied Digital and Core Scientific are facing substantial bearish positions. According to the cited ORTEX data, short interest ranges from roughly 20% to 26% of their free floats—the shares available for public trading—with about $17 billion worth of stock sold short across the five companies.

The reported gains are unrealised, rather than profits already secured by closing positions. Short sellers generally borrow shares and sell them, hoping to buy them back at a lower price; a subsequent rebound can erode their paper gains.

CoreWeave bets rise; Nebius bears still face yearly losses

CoreWeave’s short interest reached 23.7% of its free float, up from 19.6% at the beginning of October. Its shares have fallen almost 30% this month, producing nearly $1.7 billion in unrealised gains for short sellers.

At Nebius, short interest stood at 20% of free float, compared with 15.4% at the start of the year. Bearish investors have gained $2.94 billion on paper in October, but remain down $3.33 billion for the year to date. The contrast shows that this month’s sharp reversal has not erased their earlier losses.

Short positions in IREN and Applied Digital together generated more than $1.2 billion in October paper profits. Bets against Core Scientific added another $115 million, according to the reporting.

Selling extends into Thursday trading

The declines continued in early trading on Thursday, October 22. CoreWeave and Nebius each fell more than 4%, while IREN dropped 6.1%, Applied Digital lost 3.7% and Core Scientific declined 2.4%. These are reported early-session moves, not closing prices.

ORTEX said borrowing costs remained low across all five stocks, potentially making it less expensive for short sellers to maintain their positions.

The reported concern centres on whether rapid data centre expansion can be sustained alongside rising debt. The share-price declines and heavy short interest indicate investor scepticism; they do not, by themselves, establish that any of the companies cannot meet its financial obligations.