10 Worst AI Infrastructure and Data Center Stocks to Buy According to Short Sellers

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A steep selloff is unfolding around AI infrastructure and data center stocks, reflecting growing investor concerns about the sustainability of the AI investment boom and elevated valuations. Major indices have already retraced from all-time highs as investors increasingly question capital expenditure requirements and whether earnings expectations are running too far ahead of actual returns.

The recent sell-off in AI infrastructure and data center stocks has raised concerns that the market’s enthusiasm for artificial intelligence has run too far. After a period of strong gains fueled by massive investments in AI chips, cloud computing and data centers, several stocks are facing renewed selling pressure. Check out the 5 Cheapest AI Data Center Stocks to Buy According to Billionaires.

The Global X Data Center & Digital Infrastructure ETF (DTCR) lost nearly 4% in a single day, compounding its losses over the past six months to over 18%. Likewise, the tech-heavy NASDAQ 100 lost nearly 6% in a single day, its steepest one-day decline in 19 months. The losses brought its year-to-date gain to just 5% after it initially powered to a record high of 30,800 amid heightened interest in AI plays.

While not all companies participating in the AI infrastructure boom have the balance sheets of tech giants, data center developers and neocloud operators often require substantial external financing to build infrastructure. Likewise, higher borrowing costs, rising debt levels, and uncertain future cash flows are making investors more cautious.

The November US midterm election results have become a major trigger for the AI stocks selloff as well. Democrats gaining control of both chambers of Congress raises concerns about increased scrutiny of data center development and AI infrastructure investment.

10 Worst AI Infrastructure and Data Center Stocks to Buy According to Short Sellers

The election outcome triggered renewed concerns about potential restrictions on AI development and data-center construction. Democratic lawmakers have raised issues surrounding AI regulation, electricity consumption, and data-center expansion.

The downturn also raises questions about whether the sell-off is a temporary correction after an extraordinary rally or the start of a broader reassessment of AI-related valuations and growth expectations. Amid these concerns are the 10 Best Stocks to Buy for the Next 10 Years.

Our Methodology

To compile a list of the 10 worst AI infrastructure and data center stocks to buy now according to short sellers, we scanned the internet and exchange-traded funds. We compiled a list of the top AI infrastructure and data center companies and focused on stocks whose short interest, as a percentage of outstanding shares, is more than 5%. We then explained why the stocks are under pressure and how many hedge funds hold stakes in them. Finally, we ranked the stocks in ascending order based on short interest.

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10. Western Digital Corp. (NASDAQ:WDC)

Short Interest as of October 30:  5.18%

Year-to-Date Gain as of November 12: 68.06%

Number of Hedge Fund Holders: 98

Western Digital Corp. (NASDAQ:WDC) is under significant pressure following a sharp selloff in AI infrastructure and storage stocks. The stock plunged by approximately 17.4% in a single day as investors reassessed the sustainability of data-center spending, future hard-drive pricing, and the company’s elevated valuation.

Western Digital Corp. has benefited from rising demand for high-capacity hard disk drives (HDDs) used in hyperscale data centers and cloud infrastructure. However, investors are increasingly concerned that the enormous capital spending required to build AI infrastructure may face regulatory and political obstacles.

While the company delivered a 55% increase in revenue to $4.38 billion, in the first quarter of fiscal 2027, cloud revenue accounted for 88% of total revenue at $3.9 billion. This makes it particularly vulnerable to any slowdown in hyperscaler spending or delays in new data center construction. Check out how Near-Term Weakness Diverges from Robust Cloud Demand.

The biggest concern is that much of Western Digital Corp.’s anticipated AI-driven growth may already be priced in. Before the selloff, the company traded at 22x forward P/E versus 10.3x for the industry.

Nevertheless, the selloff does not necessarily reflect a deterioration in Western Digital Corp.’s underlying business. Revenue in fiscal fourth quarter 2026 was up 44% to $3.75 billion, with gross margin at 54.4%.

9. Super Micro Computer Inc. (NASDAQ:SMCI)

Short Interest as of October 30:  11.38%

Year-to-Date Gain as of November 12:  -6.64%

Number of Hedge Fund Holders: 62

Super Micro Computer Inc. (NASDAQ:SMCI) has come under pressure amid growing concerns about AI server profitability and execution risks. Although demand for AI infrastructure remains strong, investors are increasingly questioning whether Super Micro can convert its rapid revenue growth into sustainable earnings and cash flow.

The stock has shed more than 30% in market value over the past month amid growing uncertainty about long-term growth prospects. While the company is benefiting from strong demand for AI servers and data center infrastructure, its exposure to the rapidly expanding AI market does not necessarily translate into sustainable shareholder returns.

Super Micro Computer Inc. reported impressive first-quarter fiscal 2027 results, with revenue surging 298% to $19.95 billion and adjusted EPS of $1.81. However, the company’s gross margins thinned further to 12.7% from 17.5% in the preceding quarter. The problem is that large AI server deployments generate substantial revenue but can carry lower margins than traditional enterprise server products.

Customer concentration is also becoming a problem as one customer accounted for approximately 44% of SMCI’s first-quarter revenue, compared with 28% for the entire previous fiscal year. Even with strong AI demand, investors may be uncomfortable with this level of dependence. Check out how the company won over $60B in orders.

Although management raised the fiscal 2027 revenue forecast to $72 billion– $82 billion, investors must weigh the company’s impressive growth prospects against thin margins and customer concentration. These challenges could make Super Micro Computer Inc. a relatively risky choice among AI infrastructure and data center stocks, particularly for investors prioritizing consistent profitability and predictable cash generation.

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