Short sellers have been cleansing up to begin 2025 amid a large sell-off in a few of the market’s hottest names over the past two years.
Short sellers have made a combined $15 billion betting against Nvidia (NVDA) and Tesla (TSLA) stock so far this yr, based on data from S3 Partners. Tesla shorts alone have raked in nearly $11 billion while bets against Nvidia have brought in greater than $4 billion.
Tesla’s 40% year-to-date drop has led the so-called “Magnificent Seven” declines. Investors have grown concerned about CEO Elon Musk’s concentrate on government efficiency efforts and the way his role with President Donald Trump’s administration could possibly be a turnoff to the electrical vehicle maker’s customer base.
But it surely hasn’t just been Tesla lagging. As an index the “Magnificent Seven” — which also includes Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META) — is underperforming the S&P 500 this quarter by probably the most since 2022.
Short sellers have profited on all the names within the cohort this yr. They’ve brought in nearly $5 billion betting against Apple stock, which is down nearly 14% in 2025.
The crash in the preferred trade of the past two years comes as investors have been rerating their growth expectations. Fears of slowing economic growth and the impact of Trump’s tariff policies have weighed on markets. Meanwhile, Big Tech has faced growing investor criticism about its ballooning AI spend and whether or not it would eventually boost future profits as much as Wall Street hopes. The yr also included a large drawdown in some large tech names, including Nvidia, following the discharge of a less expensive AI model from Chinese company DeepSeek.
Now with many of the names sitting around 20% off their recent 52-week highs, the looming query for markets is whether or not or not investor appetite for the stocks that led the market higher for the past two years will return.
“Perhaps these tech stocks got ahead of their skis a bit of bit,” BMO Capital Markets chief investment strategist Brian Belski told Yahoo Finance last week. “But at the tip of the day, these are monster firms that outline the expansion trajectory for the USA stock market. They should not going away.”
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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