Betting against the seemingly unstoppable AI trade has been difficult in recent years, yet short sellers continue to pursue such positions.
However, short sellers are now looking beyond high‑profile bets on chips and targeting other segments of the AI ecosystem, distinguishing weaker performers from stronger ones as the technology sector evolves.
“Short‑selling activity is broadening across the AI value chain, covering software, robotics, autonomous vehicles, quantum computing, cloud infrastructure and data‑center operators, as investors increasingly question which firms can turn AI spending into lasting returns,” Chessum explained.
According to Chessum, the rise in short positions indicates that the AI trade is maturing; although investors have embraced the overall AI narrative, they are becoming more selective about which segments of the AI value chain offer opportunities and which may falter.
Several prominent short sellers have expressed doubt about the longevity of the chip trade and its sustainability. Michael Burry, known from “The Big Short,” disclosed earlier this year that he had shorted the iShares Semiconductor ETF (SOXX) in June, after also taking positions against Nvidia and Micron Technology—two leading names in the AI hardware arena.
Chessum points out that recent data reflects a shift away from approaches like Burry’s, which should be seen as selective stock picking under a broadly supported theme rather than a blanket sector bet.
He told Themoneytimes that short sellers are no longer issuing a blanket accusation against AI hardware; instead, they are focusing on firms whose valuation, funding, competitive position or execution are open to question.
Among the recent targets are former meme‑stock names that have received a boost from the AI hype. Chessum notes that Soundhound AI and the Chinese AI model developer Z.AI are being shorted due to their elevated valuations and uncertain paths to monetization.
Chessum said SoundHound now has 33.57% of its shares on loan, reflecting high reported short interest alongside a conspicuous yet disputed AI growth narrative. Z.Ai’s appeal is highlighted by strong borrowing demand against limited supply, positioning it as one of the most valuable AI borrow positions in the market.
S&P Global data indicates that AI short positions are becoming more global, moving beyond the most active US stocks. The firm notes heightened shorting of AI‑related firms in Asia, such as Quanta Computer and Wiwynn, illustrating how investor exposure has broadened to servers, memory, wafer production and semiconductor equipment.
The cautious stance of short sellers reflects ongoing uncertainty about AI monetization across the broader market. S&P Global reported that fewer than half of enterprise AI projects launched in the past year are expected to deliver positive returns within a year.
In this context, securities‑lending activity shows neither a blanket rejection of AI nor a indiscriminate short squeeze; rather, it signals a more mature market where investors are evaluating which firms can convert investment, capacity and technological promise into sustainable returns.