On January 27, Sherry Paul, a senior portfolio manager at Morgan Stanley, appeared on CNBC’s ‘Closing Bell’ to discuss whether more volatility is ahead, following a volatile week in the market. Paul clarified that volatility is a standard part of investing that signifies something emergent rather than something inherently bad. She believes that the market is moving away from the ‘Magnificent Seven’ and toward what she calls ‘magnificent thematics.’ These themes include the new world order, AI automation, innovation, and longevity. By following these trends, Paul suggested that investors can identify specific sector weightings to overweight rather than simply moving their assets into cash.
Paul also argued that the MAG7 are more important than ever, but their nature is changing from single-focus companies into diversified holding companies. She pointed out the distortion in traditional sector labeling and noted that tech companies are now making movies, while consumer discretionary companies are launching rockets and developing point-and-click technologies. Because of this, she recommended an equal-weight approach for traditional ETF investors to avoid over-concentration, while acknowledging that significant value is still set to be unlocked within these large firms and the energy sector. For the investment strategy for 2026, Paul advised leaning into the other 473 stocks in the S&P 500 rather than staying overweight in mega-caps. Her core thesis is that every company, regardless of its industry, is now effectively a technology company. She warned that businesses failing to understand AI’s application to their specific models will face extinction events.
That being said, we’re here with a list of the 11 best high short interest stocks with biggest upside potential.
Our Methodology
We sifted through the Finviz stock screener to compile a list of stocks with a short percentage of float between 15% and 25%. We then selected 11 stocks that had an upside potential of over 45%. The stocks are ranked in ascending order of their upside potential. We have also added the hedge fund sentiment for each stock, as of Q3 2025.
Note: All data was sourced on January 27.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
11 Best High Short Interest Stocks With Biggest Upside Potential
11. Apellis Pharmaceuticals Inc. (NASDAQ:APLS)
Number of Hedge Fund Holders: 49
Average Upside Potential: 47.33%
Apellis Pharmaceuticals Inc. (NASDAQ:APLS) is one of the best high short interest stocks with biggest upside potential. On January 21, Bank of America analyst Tazeen Ahmad upgraded Apellis to Buy from Neutral with an unchanged price target of $28. BofA maintains that the market is currently undervaluing Empaveli’s commercial prospects in treating rare kidney diseases, citing a robust launch trajectory that has already secured 267 new patient start forms since its late July approval. This initial 5% penetration of the 5,000-patient US market has encouraged analysts to forecast continued upside for financial estimates as the drug expands into new indications.
A day before that, Wells Fargo reduced its price target for Apellis Pharmaceuticals Inc. (NASDAQ:APLS) to $26 from $29 while maintaining an Overweight rating, primarily due to a slower-than-anticipated commercial ramp for Empaveli in C3G and IC-MPGN indications.
Consequently, the firm has cut its 2026–2030 revenue estimates by 20% to 50% to reflect a more gradual adoption curve. However, the estimates for Syfovre remain largely unchanged as the market awaits further proof of its performance in the permanent functional shift launch.
Apellis Pharmaceuticals Inc. (NASDAQ:APLS) is a commercial-stage biopharmaceutical company that discovers, develops, and commercializes novel therapeutic compounds to treat diseases with high unmet needs.
10. Vera Therapeutics Inc. (NASDAQ:VERA)
Number of Hedge Fund Holders: 36
Average Upside Potential: 55.09%
Vera Therapeutics Inc. (NASDAQ:VERA) is one of the best high short interest stocks with biggest upside potential. Earlier on December 19, Bank of America raised its price target for Vera Therapeutics from $48 to $66 while maintaining a Buy rating due to an increased peak revenue forecast for its lead IgAN drug from $1.7 billion to $2.2 billion. This upward revision stemmed from higher expected pricing based on class competitors and a strengthened net cash position of $680 million following a recent equity raise, which the firm believes positions Vera Therapeutics for a robust commercial launch in mid-2026.
On the same day, Goldman Sachs increased its price target for Vera Therapeutics from $55 to $95 with a Buy rating in light of a substantially expanded TAM. The revision followed the FDA approval and premium pricing of Otsuka’s Voyxact, which suggested much higher pricing potential for the APRIL/BAFF inhibitor class in treating IgAN than previously anticipated.
Furthermore, JPMorgan adjusted its price target for Vera Therapeutics Inc. (NASDAQ:VERA) to $96 from $99 with an Overweight rating on the stock following a broader model update across the firm’s small-to-mid-cap biotech coverage group.
Vera Therapeutics Inc. (NASDAQ:VERA) is a clinical-stage biotech company that develops and commercializes transformative treatments for patients with serious immunological diseases.
9. Cipher Mining Inc. (NASDAQ:CIFR)
Number of Hedge Fund Holders: 40
Average Upside Potential: 56.11%
Cipher Mining Inc. (NASDAQ:CIFR) is one of the best high short interest stocks with biggest upside potential. On January 27, Keefe Bruyette analyst Stephen Glagola raised the firm’s price target on Cipher Mining to $22 from $13 and kept an Outperform rating due to a positive outlook on the company’s transition into AI infrastructure. The firm updated its financial model ahead of Cipher’s Q4 2025 report to account for favorable hash price trends and the successful execution of its AI colocation strategy, specifically highlighting the potential for significant new lease signings throughout 2026.
In other news, earlier on December 23, Cipher Mining Inc. (NASDAQ:CIFR) acquired “Ulysses,” which is a 200-megawatt site in Ohio. This marked the company’s first expansion outside of Texas. The transaction includes 195 acres of land with secured power capacity and interconnection approvals from AEP Ohio, providing direct access to PJM, the nation’s largest wholesale electricity market.
Optimized for HPC due to its scale, diverse fiber paths, and proximity to a major metropolitan area, the site is on track for energization in Q4 2027. This acquisition strengthens Cipher Mining’s strategic shift toward AI infrastructure and expands its total development pipeline to 3.4 GW across 8 sites.
Cipher Mining Inc. (NASDAQ:CIFR), together with its subsidiaries, develops and operates industrial-scale data centers in the US.
8. Mineralys Therapeutics Inc. (NASDAQ:MLYS)
Number of Hedge Fund Holders: 53
Average Upside Potential: 61.41%
Mineralys Therapeutics Inc. (NASDAQ:MLYS) is one of the best high short interest stocks with biggest upside potential. On January 6, Mineralys Therapeutics announced the late 2025 filing of its NDA for lorundrostat. The company highlighted several clinical milestones, including the completion of three positive trials (Explore-CKD, Launch-HTN, and Advance-HTN), which demonstrated the drug’s 24-hour blood pressure control and safety across diverse patient populations. Additionally, Mineralys remains on track to report topline results from its Phase 2 Explore-OSA trial in Q1 2026 and continues to gather long-term data through its Transform-HTN open-label extension trial.
Earlier on December 19, Bank of America raised the firm’s price target on Mineralys Therapeutics to $46 from $43 with a Buy rating following the company’s Q3 2025 results and confirmed cash runway into 2027. BofA identified the acquisition of a commercialization and development partner as a major potential catalyst and viewed such a collaboration as necessary to maximize the value of the firm’s assets.
On the same day, Stifel also raised its price target on Mineralys Therapeutics Inc. (NASDAQ:MLYS) to $52 from $45 while keeping a Buy rating on the shares as part of a 2026 outlook note for the firm’s Biopharma coverage.
Mineralys Therapeutics Inc. (NASDAQ:MLYS) is a clinical-stage biopharmaceutical company that develops medicines to target diseases driven by dysregulated aldosterone in the US.
7. Alphatec Holdings Inc. (NASDAQ:ATEC)
Number of Hedge Fund Holders: 40
Average Upside Potential: 64.37%
Alphatec Holdings Inc. (NASDAQ:ATEC) is one of the best high short interest stocks with biggest upside potential. On January 27, TD Cowen lowered its price target for Alphatec to $20 from $27 while maintaining a Buy rating following a transfer of coverage. The firm suggested that the current market expectations do not fully appreciate the company’s growth vectors, such as its recent 2026 revenue outlook of $890 million and the acquisition of exclusive US rights to Theradaptive’s OsteoAdapt bone graft. The firm believes that this undervaluation creates potential for upward revisions to financial estimates as Alphatec continues to execute on its pure-play spine medtech strategy.
Earlier on January 12, Alphatec Holdings Inc. (NASDAQ:ATEC) and Theradaptive entered a landmark partnership granting Alphatec exclusive US commercial rights to market and distribute OsteoAdapt, a breakthrough osteoinductive bone graft for spinal fusion.
Announced alongside Theradaptive’s Series B investment round, the agreement is designed to deliver significant long-term value through a structure of upfront and milestone payments coupled with perpetual royalties. This collaboration aims to disrupt the $10 billion US spine biologics market by leveraging Alphatec’s commercial network to provide a protein-engineered regenerative solution that triggers natural bone growth.
Alphatec Holdings Inc. (NASDAQ:ATEC) is a medical technology company that designs, develops, and advances technologies for the surgical treatment of spinal disorders in the US and internationally.
6. Arcellx Inc. (NASDAQ:ACLX)
Number of Hedge Fund Holders: 36
Average Upside Potential: 65.78%
Arcellx Inc. (NASDAQ:ACLX) is one of the best high short interest stocks with biggest upside potential. On January 7, UBS assumed coverage of Arcellx with a Buy rating and $100 price target as the firm assumed coverage on 22 small-to-mid cap biotech names. Contending that biotech fundamentals are now inflecting after a rough period, UBS expects investor confidence to recover and sees this positioning the sector for strong performance in 2026.
Earlier on December 22, Wells Fargo initiated coverage of Arcellx Inc. (NASDAQ:ACLX) with an Overweight rating and a $100 price target, identifying the company’s anito-cel as a future pillar in the treatment of multiple myeloma.
Wells Fargo contends that anito-cel is positioned to capture a majority of the BCMA CAR-T market for fourth-line multiple myeloma due to its attractive efficacy and safety profile, with rapid uptake expected upon its projected launch in 2026. Furthermore, the firm remains optimistic about Arcellx’s broader opportunities within the CAR-T space, notwithstanding recent data from industry competitors.
Arcellx Inc. (NASDAQ:ACLX), together with its subsidiary, develops various immunotherapies for patients with cancer and other incurable diseases in the US.
5. Riot Platforms Inc. (NASDAQ:RIOT)
Number of Hedge Fund Holders: 57
Average Upside Potential: 69.03%
Riot Platforms Inc. (NASDAQ:RIOT) is one of the best high short interest stocks with biggest upside potential. On January 27, Keefe Bruyette analyst Stephen Glagola raised the firm’s price target on Riot Platforms to $23 from $16 while maintaining an Outperform rating, following the company’s 10-year 25MW Data Center Lease and Services Agreement with AMD at its Rockdale facility.
Glagola noted that this partnership, which is expected to generate ~$311 million in contract revenue, provides Riot Platforms with a high-quality tenant and meaningful organic demand visibility for its HPC and AI strategy. By committing roughly 21% of Rockdale’s capacity to this long-duration operating income profile, Riot Platforms maintains a cost structure that remains structurally below tier-3 builds, positioning the company to capitalize on surging infrastructure demand.
On January 20, Needham also raised its price target for Riot Platforms Inc. (NASDAQ:RIOT) to $30 from $28 with a Buy rating due to the company’s lease with AMD. The firm noted that while the lease economics are lower than those of industry peers, the project offers an attractive yield on cost due to a highly efficient capital expenditure of only $3.6 million per MW.
Riot Platforms Inc. (NASDAQ:RIOT), together with its subsidiaries, operates as a Bitcoin mining company in the US.
4. Duolingo Inc. (NASDAQ:DUOL)
Number of Hedge Fund Holders: 50
Average Upside Potential: 69.86%
Duolingo Inc. (NASDAQ:DUOL) is one of the best high short interest stocks with biggest upside potential. On January 27, DA Davidson lowered its price target for Duolingo to $170 from $205 with a Neutral rating.
While the firm’s proprietary data tracking over 170,000 existing users showed that January experienced its strongest month-over-month increase since tracking began in July, an extrapolation of this strength for the full Q1 implies that DAUs will fall ~4% below current consensus estimates. The adjustment reflects ongoing concerns regarding the company’s ability to maintain high user growth rates amid a trend of deceleration in the language-learning platform’s engagement metrics.
Additionally, on January 13, Morgan Stanley analyst Nathan Feather lowered the firm’s price target on Duolingo to $275 from $300 and kept an Overweight rating on the shares. In a broader note on the North American Internet sector, the firm predicted that 2026 will mirror 2025, with the market favoring companies that show a clear return on invested capital from GenAI or GPU technologies.
Duolingo Inc. (NASDAQ:DUOL) operates as a mobile learning platform in the US, the UK, and internationally. The company offers courses in 40 different languages through its Duolingo app.
3. Pagaya Technologies Ltd. (NASDAQ:PGY)
Number of Hedge Fund Holders: 38
Average Upside Potential: 78.66%
Pagaya Technologies Ltd. (NASDAQ:PGY) is one of the best high short interest stocks with biggest upside potential. On January 2, Keefe Bruyette reduced the price target on Pagaya to $35 from $38 while maintaining an Outperform rating. This sentiment was announced as the firm adjusted price targets in consumer finance and payments groups.
In Q3 2025, Pagaya Technologies Ltd. (NASDAQ:PGY) achieved a 19% year-over-year increase in network volume to $2.8 billion and a 36% rise in total revenue to $350 million. This performance was anchored by a 31% growth in personal loans and an expansion in auto and point-of-sale volumes, which reached annualized run-rates of $2.2 billion and $1.4 billion, respectively.
Pagaya is leveraging its B2B2C model to institutionalize long-term relationships and reported the highest number of partners in its onboarding queue in company history. This pipeline includes up to 8 new partners across personal loans, auto, and POS asset classes, including mega billion-dollar partners. Management now expects full-year network volume between $10.5 billion and $10.75 billion and total revenue up to $1.325 billion, with current cash reserves projected to fund operations well into 2028.
Pagaya Technologies Ltd. (NASDAQ:PGY) is a product-focused technology company that deploys data science and proprietary AI-powered technology for financial services and other service providers, their customers, and asset investors in the US, Israel, and the Cayman Islands.
2. Nuvation Bio Inc. (NYSE:NUVB)
Number of Hedge Fund Holders: 39
Average Upside Potential: 104.99%
Nuvation Bio Inc. (NYSE:NUVB) is one of the best high short interest stocks with biggest upside potential. On January 27, Truist raised its price target on Nuvation Bio to $13 from $11 and maintained a Buy rating, citing the Ibtrozi franchise’s robust initial performance as part of a Q4 2025 earnings preview for the biotech sector. Despite seasonal challenges, the firm observed stronger-than-expected market uptake, which positions Ibtrozi as the preferred ROS1 agent over its competitors.
Earlier on January 21, RBC Capital analyst Leonid Timashev raised the price target for Nuvation Bio to $12 from $9 with an Outperform rating. This adjustment followed meetings with management teams, leading the firm to update its financial models for several companies in the biotech sector.
On January 12, H.C. Wainwright lowered its price target for Nuvation Bio Inc. (NYSE:NUVB) to $17 from $18 while maintaining a Buy rating. The firm noted that the company’s preliminary Q4 Ibtrozi net product revenue of ~$15.7 million aligned with its expectations.
Nuvation Bio Inc. (NYSE:NUVB) is a clinical-stage biopharmaceutical company that develops therapeutic candidates for oncology.
1. Xencor Inc. (NASDAQ:XNCR)
Number of Hedge Fund Holders: 33
Average Upside Potential: 105.01%
Xencor Inc. (NASDAQ:XNCR) is one of the best high short interest stocks with biggest upside potential. On January 6, Bank of America raised its price target for Xencor to $20 from $17 while maintaining a Neutral rating. This sentiment was announced by the firm as part of its broader update to its US Biopharmaceuticals coverage.
The firm suggested that the biotech sector is experiencing a resurgence driven by several stabilizing factors, including a reward for positive data catalysts, increased large-cap M&A and licensing activity, better access to capital, and a limited impact from drug price regulations. While BofA noted that fundamental pieces are falling into place for the industry, the firm remains cautious regarding the long-term sustainability of this recovery.
Additionally, earlier on December 17, Barclays also raised its price target for Xencor Inc. (NASDAQ:XNCR) from $23 to $26 and maintained an Overweight rating. This decision followed an adjustment of valuations across the biotech sector as part of its 2026 outlook.
Xencor Inc. (NASDAQ:XNCR) is a clinical-stage biopharmaceutical company that discovers and develops engineered monoclonal antibodies for the treatment of asthma and allergic diseases, autoimmune diseases, and cancer.
While we acknowledge the potential of XNCR to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than XNCR and that has 100x upside potential, check out our report about this cheapest AI stock.
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