Short Interest Monitor: Neoclouds

The latest edition of the Short Interest Monitor features a tech-heavy mix of companies, including two major neocloud providers, which rent out AI computing capacity, that have faced investor scrutiny of late.

Short sellers targeted CoreWeave (CRWV) in early October amid its debt-fueled expansion and heavy cash burn. The neocloud provider, which is backed by Nvidia (NVDA), made headlines this month when its bond yields spiked on fears about the sustainability of its AI infrastructure spending. CoreWeave has amassed more than $50 billion in debt and lease obligations to fund its data center expansion and purchase high-end Nvidia chips. And while its revenue more than doubled in the second quarter to $2.58 billion, its cash burn also more than doubled to $5.7 billion due to record capital expenditures. 

IREN Limited (IREN) was another short-seller favorite earlier this month. Like its competitor CoreWeave, IREN has faced mounting concerns over its massive capital expenditures and rising debt load. Some investors and analysts have questioned whether its pivot from bitcoin mining to AI data center infrastructure can generate cash flows quickly enough to cover its costs. In late August, IREN said it expects its capital expenditures to rise to between $25 billion and $30 billion in fiscal year 2027. By comparison, the company reported quarterly revenue of just $137.2 million in its most recent earnings report, down 26.7% year over year due to a decline in its legacy bitcoin mining business. IREN's AI cloud services revenue grew 110% from the prior quarter to $70.5 million, however.

American Airlines (AAL) made the Short Interest Monitor for the second time in the past six weeks amid surging fuel costs. The company saw its short interest spike more than 32% in early October. In its October 22 third-quarter earnings report, AAL revealed its revenue surged 19.3% year over year due to higher airfares and strong travel demand. However, the company reported a $269 million net loss as jet fuel expenses soared 67.5% year over year. It also projected an adjusted loss of $0.50 to $1.10 per share for the fourth quarter. Management continues to focus on higher-yield fares and premium product expansion to help offset the jet fuel headwinds.

The table below shows the complete Short Interest Monitor, which features 10 equities with elevated and rising short interest. Each stock has a market cap of at least $2 billion and short interest that represents at least 10% of its outstanding shares.