Short sellers hold chip bets ahead of Nvidia earnings as semiconductor rally weakens

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Chip shorts rise before Nvidia

Highlights

Short interest in Qualcomm reached $11.8 billion, marking a decade high, while Micron, Nvidia, and Intel positions remain elevated ahead of Nvidia earnings.
Bearish bets persist as traders await Nvidia's results, despite prior losses and the sector's steep AI-driven gains, according to S3 Partners' Ihor Dusaniwsky.
The PHLX Semiconductor Index remains up over 65% year to date, but recorded its first weekly loss in seven weeks, reflecting renewed valuation concerns.

Short positioning stays high before Nvidia results

As reported by CNBC, short sellers are largely maintaining bearish wagers on major semiconductor stocks even as the group heads into another potentially market-moving Nvidia earnings report. The positioning stands out because Nvidia's results have repeatedly shaped sentiment across the broader AI hardware trade, creating risk for investors betting on further declines.

Data from S3 Partners show Qualcomm has become one of the most heavily shorted stocks in the sector. Short interest recently reached about $11.8 billion on a notional basis, the highest level in at least a decade, while Micron's short interest remains just below a 52-week high and bearish positions in Nvidia and Intel also stay elevated compared with the start of the year.

Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners, said there has not been capitulation on the short side. He said the speed of the move has been so great that traders who have lost money want to see how much they can recover if stock prices continue to pull back.

Valuation doubts test AI-driven semiconductor trade

The persistence of these positions suggests some investors are increasingly questioning whether semiconductor valuations can continue rising after years of gains driven by AI enthusiasm. Chip stocks have been central to the broader market rally, with investors directing money toward companies expected to benefit from expanding spending on AI infrastructure.

Even so, betting against the sector has often been costly as strong demand for AI-related hardware continues to exceed expectations and major chipmakers repeatedly deliver results above forecasts. The PHLX Semiconductor Index is still up more than 65% year to date, even after recording its first weekly loss in seven weeks.

Our earlier update on Nvidia’s NVDA outlook focused on how Beijing’s ban on the China-specific RTX 5090D V2 chip could pressure the company’s gaming segment and highlight ongoing regulatory risk in a key market. Despite that headwind, the analysis noted NVDA was still trading in a bullish technical setup above major moving averages, with $220–$235 framed as the near-term range and a break above $235 as an important momentum signal.

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