Wall Street Bets Against AI and Quantum Stocks Despite Big Rally

Wall Street Bets Against AI and Quantum Stocks Despite Big Rally

AI stocks are red-hot once again—but not everyone’s buying the hype.

Despite a wave of investor optimism fueled by cooling inflation, improving U.S.-China relations, and new deal activity from Trump’s Middle East visit, some of Wall Street’s most explosive tech names are also becoming top short targets.

The Cboe Volatility Index (VIX)—Wall Street’s so-called "fear gauge"—fell below 20 for the first time since March, signaling renewed risk appetite. But behind the bullish sentiment, many traders are preparing for a potential pullback in overheated names.

? Top Short Targets

• SoundHound AI (SOUN) has become one of the most shorted AI stocks. Despite backing from Nvidia, traders have placed $1.2 billion in short bets, dwarfing the $340 million in long positions, according to S3 Partners.

• Super Micro Computer (SMCI), another AI favorite, saw its shares surge 40% this week. Yet, short positions now exceed long positions by over $500 million, suggesting many investors believe the rally is unsustainable.

? What This Means

Stocks like Nvidia (NVDA), Palantir (PLTR), and AMD have been riding the AI wave, but their popularity also makes them targets for hedge funds betting on corrections.

In short, while AI and quantum tech continue to dominate headlines and portfolios, not everyone is convinced the momentum will last.