In this article, we will look at the 5 Worst Cloud Stocks To Buy According to Short Sellers. Please visit 7 Worst Cloud Stocks To Buy According to Short Sellers if you would like to see an extended list and the methodology behind it.
5. Zscaler Inc. (NASDAQ:ZS)
Short Interest: 11.47%
On June 10, Shrenik Kothari, an analyst at Robert W. Baird, reiterated a Buy rating on Zscaler Inc. (NASDAQ:ZS) and set a price target of $230. The firm’s price target offers an additional 79% upside from here. Similarly, on June 1, Guggenheim upgraded Zscaler Inc. (NASDAQ:ZS) to Buy from Neutral and assigned a target price of $214. The positive analyst sentiment followed the company’s Q3 2026 earnings report.
The quarterly report came out on May 26. Zscaler Inc. (NASDAQ:ZS) reported revenue of $850.48 million, up 25% year over year. The earnings per share came in at $1.08, which comfortably beat the Wall Street consensus of $1.01.
For Q4 2026, the company has raised its revenue guidance to between $875 million and $878 million. This translates to an EPS of $1.08 to $1.09. Guggenheim believes Zscaler is in a good position in cloud-based security, such as SASE and SSE. As a result, it could generate more revenue in the coming years.
Zscaler Inc. (NASDAQ:ZS) is a cloud-based internet security platform provider. The company is located in San Jose, California, and was founded in September 2007 by Jay Chaudhry and K. Kailash.
4. Atlassian Corporation (NASDAQ:TEAM)
Short Interest: 12.3%
On June 9, Ryan MacWilliams of Wells Fargo assigned a Buy rating to Atlassian Corporation (NASDAQ:TEAM) while increasing the price target. He raised the firm’s price target on the stock from $120 to $140. The upwardly revised price target offers an additional 53% upside from the current levels.
The analyst believes investors remain divided on AI. They question whether AI will help the company grow the number of users or revenue per user. The company disclosed in its Q2 results that customers using AI tools in Jira create about 5% more tasks, use the product more often, and add users 5% faster than those who don’t use AI tools. Moreover, customers using its AI product Rovo are growing their revenue twice as fast as those who don’t. The software company, on September 8, 2025, announced that it would shut down its older Data Center business over the next three years. As a result, the Cloud business could register growth as customers move from the Data Center to the Cloud.
Atlassian Corporation (NASDAQ:TEAM) is a software-as-a-service company that focuses on team collaboration and productivity software such as Jira, Confluence, and Loom. The company is based in San Francisco, California, and was founded in October 2002 by Michael Cannon-Brookes and Scott Farquhar.
3. Fastly Inc. (NASDAQ:FSLY)
Short Interest: 14.65%
On June 5, William Blair analyst Jonathan Ho reiterated a Buy rating on Fastly Inc. (NASDAQ:FSLY) without assigning any price target to the stock. In contrast to William Blair, Raymond James analyst Frank Louthan had upgraded the stock to Outperform from Market Perform on May 8. He also assigned a price target of $23 to the stock. The analyst believes demand for the company’s network capabilities will stay strong going forward. As AI inference takes center stage and requires better data center interconnection, Fastly’s products are going to stay in demand, according to the analyst.
Fastly Inc. (NASDAQ:FSLY) reported its first-quarter fiscal 2026 earnings on May 6. The market reacted negatively to the report, with the stock down over 37% after the announcement. This negative sentiment comes as a surprise, considering the company not only raised its outlook but also had a positive analyst sentiment after the earnings.
For the full year 2026, FSLY has raised its revenue guidance to between $710 million and $725 million. This translates to an EPS of $0.27 to $0.33. Despite competitors raising prices, management intends to stick to the pricing it has already agreed with its customers.
Fastly Inc. (NASDAQ:FSLY) operates a programmable, high-performance edge cloud platform that delivers faster, safer, and more scalable sites and apps to customers. The company is based in San Francisco, California.
2. Workday Inc. (NASDAQ:WDAY)
Short Interest: 15.44%
On June 2, Workday Inc. (NASDAQ:WDAY) announced a new integration between its data cloud and Amazon Web Services. This integration will allow developers to use Workday’s HR and financial data with Amazon Web Services. Moreover, this will make it easier for users to access data directly without having to copy, move, or build complex data connections. As part of this partnership, different Workday tools, such as Workday Data Lake and Workday Data Connect, will soon be available for AWS customers in early access. Gabe Monroy, chief technology officer at Workday, remarked,
By integrating Workday Data Cloud with AWS, customers get faster, safer AI built on data they already trust, and developers get to spend their time shipping products instead of on plumbing and permission rewrites.
Earlier on May 27, Bank of America Securities (BofA) resumed coverage of Workday Inc. (NASDAQ:WDAY) with a Neutral rating and also assigned a price target of $140. The stock had been trading sideways since March, and BofA’s coverage provided a boost that pushed the stock price higher. However, the stock has now come back to the same price level, meaning BofA’s price target hardly offers any upside for investors.
Workday Inc. (NASDAQ:WDAY) is a provider of cloud-based enterprise software focused on human capital management, financial management, and planning solutions. Its platform enables organizations to manage payroll, workforce planning, accounting, and analytics.
1. DigitalOcean Holdings, Inc. (NYSE:DOCN)
Short Interest: 15.73%
On June 3, KeyBanc initiated coverage on DigitalOcean Holdings, Inc. (NYSE:DOCN) with an Overweight rating and assigned a price target of $200 to the stock. The price target reflects 15.6% upside from current levels. As AI demand increases, DigitalOcean is investing heavily to build and expand its cloud infrastructure, the analyst told investors in a research note. As a result, the company is expected to generate higher cloud revenues in the coming year.
Analyst Jackson Ader had this to say about the company’s journey and future prospects:
The moment came for DigitalOcean in 2024, when the world began realizing that hyperscalers were unable to keep up with AI workload demand. Customers, both traditional and AI start-ups, turned to DigitalOcean for their AI inference needs and were met with easy deployments, access to storage, memory and CPU compute that was already DigitalOcean’s specialty and, importantly for the stock, an increasing amount of GPU and CPU capacity. We believe DigitalOcean’s playbook has more room to expand.
Earlier, on May 12, UBS also expressed confidence in the company’s long-term growth outlook. The firm raised its price target on DigitalOcean Holdings, Inc. (NYSE:DOCN) from $160 to $170 and reaffirmed a Neutral rating. Discussions with management increased confidence in the company’s competitive positioning, business strength, and growing demand driven by AI.
DigitalOcean Holdings, Inc. (NYSE:DOCN) operates an agentic inference cloud platform that enables developers and growing businesses to run, scale, and build applications worldwide. The company’s offerings include infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS), and software-as-a-service (SaaS) solutions. It also delivers machine learning (ML) and artificial intelligence (AI) solutions.
While we acknowledge the potential of DOCN 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 DOCN and that has 100x upside potential, check out our report about the cheapest AI stock.
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