With financial markets still in flux and battling high volatility, it can be challenging to know how to play the current conditions. The tariffs levied by the United States against Canada, Mexico, and China have sparked considerable uncertainty and left some investors wary.
Even the market’s most prominent tech stocks have turned downward recently, fueling speculation that a bear market may be imminent. While some investors respond by trimming their positions, short-sellers have seized the opportunity to bet against some surprising stocks.
Market research firm Hazletree recently published its February 2025 Shortside Crowdedness Report, highlighting the stocks that short-sellers targeted throughout the month. Its findings revealed some surprising developments.
Some previously shorted tech stocks still remain high on the firm’s list from last month. But looking at the most shorted tech stocks from February reveals an unexpected trend, even in a market marked by such high uncertainty.
Many stocks have been falling recently and remained in the red, prompting short sellers to close in on some surprising tech stocks.
Short-sellers are focused not just on tech but on a specific area
Given how poorly many tech stocks have performed over the past month, it’s hardly surprising that short sellers would be targeting the industry. Most members of the Magnificent 7 are still in the red for the month, including Tesla (TSLA) , Nvidia (NVDA,) and Microsoft (MSFT) .
This is likely part of why tech remains the most heavily shorted sector for the third consecutive month, according to Hazletree. As the firm notes in its most recent short side report, “The data is compiled from Hazeltree’s proprietary securities finance platform data, which tracks approximately 15,000 global equities.”
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Companies are assigned a short crowdedness score between 1 and 99, reflecting each one’s concentration of shorting activity. Last month, Apple (AAPL) and Super Micro Computer (SMCI) ranked among the most heavily shorted stocks. While both their scores have decreased slightly, they remain within the top ten most shorted large-cap stocks, with scores of 88 and 91, down from 93 and 96, respectively.
This month, though, the large cap shorts list also includes four newcomers: IBM (IBM) , Micron Technology (MU) , Texas Instruments (TXN) , and Microchip Technology (MCHP) , three of whom have scores of 85.
These companies, like SMCI, operate primarily in the hardware space, producing semiconductors and other components for other tech companies that build consumer-facing products.
The rise in shorting hardware producers may seem odd, as the sector isn’t slowing down. Earlier this year, almost every leading tech manufacturer, including Amazon AMZN, Meta Platforms META, and Microsoft, indicated plans to significantly scale their artificial intelligence (AI) spending.
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Hazletree’s data suggests that short-sellers are not optimistic that there is enough demand for all hardware producers to continue growing. However, the managing director of data insights, Tim Smith, provides further context.
“Our February Shortside Crowdedness Report analysis shows the U.S. tech sector continued to see layoffs, though at a slower pace than last year, alongside a surge in job postings, low unemployment, and a contracting IT job market,” he states. “This points to a market in transition — not collapse — as companies recalibrate talent strategies to align with shifting priorities and economic conditions.”
The bears are closing in, but the market still appears complicated
The fact that companies’ priorities may be shifting, as Smith notes, makes for a market that is even harder to predict. While it is clear that tech leaders are still highly focused on building and scaling AI operations, short sellers seem convinced that demand isn’t strong enough to sustain all chipmakers and other hardware producers.
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Of the companies named in Hazletree’s top ten large cap tech shorts, Super Micro Computer seems to be the most popular among short sellers as of now. Data from short analysis platform Fintel shows that short interest accounts for 20.24% of its float, indicating high bearish sentiment.
The other tech stocks on the list have much lower percentages. While 6.37% of Microchip Technology’s stock is currently being sold short, short interest for all other aforementioned companies is currently below 5%.
Part of the problem for these companies may be that competing with leading chipmakers such as Nvidia and Advanced Micro Devices (AMD) is difficult. On top of that, companies such as Apple and Amazon are currently working on building their own in-house chips, which could impact demand even further.
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