Hedge Funds Ramped Up Short Bets on AI Stocks in July as Chip Sector Suffered Worst Monthly Drop Since 2008
Nashnova编辑部
Hedge funds sharply increased short bets against AI stocks in July, as the Philadelphia Semiconductor Index fell 20% — its worst month since 2008. But funds didn't exit AI entirely; they shifted capital from story stocks to companies already showing revenue.
Which names are being shorted hardest?
Per a Hazeltree report published August 12, Super Micro Computer (SMCI), CoreWeave — an AI computing-power leasing firm — and Nebius Group all ranked among the top ten most-shorted names across Hazeltree's client base of over 700 hedge funds in July.
All three were already in the top ten in June, but short positions expanded further in July. This means → funds are not testing the water — they are doubling down.
In plain terms = the market's sharpest money is betting these stocks have further to fall.
How bad was the chip selloff?
The Philadelphia Semiconductor Index dropped 20% in July; South Korea's tech-heavy KOSPI fell 22%. Both moves were the steepest single-month declines since the 2008 financial crisis.
This reflects a concentrated anxiety over two questions: whether chip valuations are too stretched, and whether AI-driven revenue can last.
In plain terms = investors are asking the same thing — AI has been the story for years, but where are the actual profits?
Did Nvidia get cut too?
Hazeltree noted that hedge funds simultaneously trimmed Nvidia longs and added to Nvidia shorts.
Overall, however, the fund community still holds a net long position in Nvidia. This means → capital is sizing down, not flipping bearish — Nvidia is still seen as the surest link in AI hardware.
The more accurate description is "de-risking," not "turning bearish." Conviction is shrinking, but it hasn't reversed.
If they're shorting AI, why say they "haven't fully exited"?
Hazeltree's own framing: funds took profits on some of the year's biggest AI winners but did not exit the trade. Instead, they redeployed capital toward companies "showing signs of monetization."
Leveraged semiconductor positions — bets funded with borrowed money — saw similar unwinds. Investors chose to cut borrowing risk, not abandon AI exposure altogether.
In plain terms = they're not souring on AI. They're moving chips from "who can tell the best story" to "who is already making money."
Could crowded shorts backfire into a squeeze?
CoreWeave reported better-than-expected Q2 results after Tuesday's close, and its stock surged.
Hazeltree warned that heavily concentrated short positions risk triggering a short squeeze — rising prices force short sellers to buy back shares, and that buying pushes prices higher still.
This means → the more shorts pile into AI infrastructure names, the more explosive the snapback when good news lands. Whether the next squeeze is brewing is now the market's key watch-point.
Content is for reference only, not financial advice.