Which Stocks With Most Short Interest Are Capturing Hedge Funds' Bearish Bets?

Wall Street’s latest moves reveal a telling story about market sentiment. According to Goldman Sachs’ comprehensive analysis of hedge fund positions—tracking 982 funds managing $4 trillion in stocks ($2.6 trillion long, $1.4 trillion short)—investors are increasingly positioning themselves against certain equities. While mega-cap AI darlings largely escape aggressive shorting, a distinct pattern emerges in stocks with most short interest among smaller and more vulnerable players.

The data paints a nuanced picture. Despite the relentless rally in equities, short interest across S&P 500 constituents remains surprisingly elevated at 2.4% of total market capitalization—placing it in the 99th percentile for the past five years and well above the long-term average since 1995. The Nasdaq 100’s short interest sits marginally higher at 2.5%, while small-cap Russell 2000 stocks draw the heaviest bearish pressure at 5.5% median short interest.

Record-High Short Interest Signals Growing Market Skepticism

Throughout 2025, short-selling activity accelerated even after two notable “short squeezes” in mid-year and late autumn that temporarily squeezed bearish positions. What’s particularly striking is the trajectory: short interest began climbing as early as spring, then maintained elevation through subsequent months. This persistence suggests that despite dramatic price rallies, significant numbers of professional investors remain unconvinced.

The spike reflects mounting concerns about valuation excesses. Oracle’s credit default swap trading volumes have surged, and candid discussions within the AI industry acknowledge visible “signs of market froth.” Against this backdrop, hedge funds are actively debating when and where to position their short bets—and the data reveals clear preferences.

Utilities Sector Emerges as the New Shorting Hotspot

Here’s where the story takes an unexpected turn. While observers might expect the most aggressive shorting activity in obviously weak tech players, Goldman Sachs highlights an unlikely target: utilities. Short interest in this traditionally stable sector jumped 0.3 percentage points to 3.2%—approaching one of the highest levels ever recorded historically.

The reason? Data center proliferation. As AI model training demands astronomical amounts of electricity, previously “boring” utility companies have become magnetic for investor capital. American Electric Power exemplifies this shift perfectly: the stock rallied over 31% during 2025, hitting a $65 billion market capitalization. Last year, the company dramatically increased its five-year capital expenditure plan from $54 billion to $72 billion—predominantly to supply power infrastructure to data centers serving Alphabet, Amazon, and Meta.

Ironically, this creates the setup for short-selling opportunities. American Electric Power’s short interest ratio currently sits at 4%, a dramatic departure from its typical 1-2% range over the past decade. For hedge funds betting on mean reversion, swollen utility valuations represent tempting targets.

Which Stocks With Most Short Interest Top the Rankings?

Tesla continues its long reign as America’s most-shorted company, but the complete rankings reveal telling details:

• Tesla (TSLA)
• Palantir (PLTR)
• Palo Alto Networks (PANW)
• JPMorgan (JPM) — a recent entrant in noteworthy fashion
• Robinhood Markets (HOOD)
• Costco (COST)
• Bank of America (BAC)
• IBM (IBM)
• Oracle (ORCL)
• Lam Research (LRCX)

Among these, certain names deserve attention. Oracle attracts $5.4 billion in aggregate short positions, Intel draws $4.6 billion, and GE Vernova (which manufactures gas turbines powering AI data centers) carries $4.1 billion. While these figures sound substantial, they represent modest percentages relative to company size—roughly 1% to 3% respectively.

However, among companies exceeding $25 billion market capitalization, the pattern shifts dramatically. Bloom Energy emerges as the most aggressively shorted relative to its size, followed by Strategy, CoreWeave, Coinbase, Live Nation, Robinhood, and Apollo. These “weaker beneficiaries” within the AI wave represent the true focus of bearish activity.

The Paradox: Bullish on Giants, Bearish on Laggards

Here’s the crucial distinction: hedge funds aren’t shorting the AI revolution itself. Amazon, Microsoft, Meta, Nvidia, and Alphabet remain the five most widely held long positions among U.S. funds. Instead, professional investors are making a calculated distinction—backing AI leaders while positioning against companies perceived as overvalued or underpositioned within the technology shift.

This bifurcated approach reflects sophisticated risk management. Bubbles frequently outlast individual fund solvency windows, so hedge funds are simultaneously riding the AI wave’s momentum while hedging through carefully selected short positions in stocks with most short interest among secondary players and defensive sectors.

What Comes Next?

Goldman Sachs’ snapshot—based on the latest holdings data from its extensive fund network—carries predictive value precisely because it represents delayed but aggregated institutional positioning. The surge in short interest among utilities and lagging AI plays suggests money managers have begun positioning for the next major market adjustment. Rather than betting against the AI trend outright, they’re betting against timing and valuations—a distinction that could prove consequential for market participants paying attention to where the smart money is actually placing its chips.