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

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4.  Nebius Group N.V. (NASDAQ:NBIS)

Short Interest as of October 30:  18.74%

Number of Hedge Fund Holders: 86

Nebius Group N.V. (NASDAQ:NBIS) is under significant market pressure as investors reassess risks in the rapidly expanding AI infrastructure industry. The stock has shed more than 30% in market value over the past month.  Short interest around the stock stands at 18.74%, signaling growing bearish positioning.

Nebius Group N.V. has been under pressure as it pursues an extremely capital-intensive expansion strategy. It raised its 2026 capital expenditure forecast to about $27 billion as it accelerated AI data center construction and expanded its GPU infrastructure. Explore Palantir partnership potential impact.

Heavy reliance on borrowing and external capital could increase interest expenses, financial risk, and potential shareholder dilution. It secured a $3.5 billion senior secured financing facility from Citi to support its data center expansion and GPU procurement. Although the financing provides additional liquidity, it also increases the company’s financial obligations.

However, the stock remains an attractive long-term investment because its underlying growth opportunity is still substantial. Second-quarter results showed strong demand for Nebius Group N.V.’s products, with revenue surging 454% to $582 million as AI cloud-adjusted EBITDA reached 50%. This rapid growth suggests Nebius is benefiting from real customer demand rather than relying solely on speculative expectations around artificial intelligence.

3. Applied Digital Corporation (NASDAQ:APLD)  

Short Interest as of October 30:  20.32%

Year-to-Date Gain as of November 12: -37.92%

Number of Hedge Fund Holders: 59

Applied Digital Corporation (NASDAQ:APLD) has emerged as a high-risk investment in the AI infrastructure and data center sector, despite benefiting from growing demand for computing capacity.  The stock has shed more than 30% of its market value, underperforming the broader market and the Insider Monkey Billionaire index, which has gained 25%.

Amid the underperformance, the company has invested heavily in developing high-performance data centers designed to support artificial intelligence (AI) and high-performance computing (HPC) workloads. However, its substantial capital requirements and exposure to a highly competitive market make the stock a potentially risky choice.

One of the biggest concerns surrounding Applied Digital Corporation is its heavy reliance on external financing to fund its ambitious expansion plans. As of August 31, the company had $3.7 billion in cash, cash equivalents, and restricted cash against $6.4 billion in debt.

Amid the high debt levels, the stock has attracted substantial short interest at 20.32% of outstanding shares, suggesting investors are betting against the company.  Why are insiders still buying Applied Digital?

Nevertheless, it has secured substantial long-term data center contracts that affirm its long-term outlook. Applied Digital Corporation has already secured approximately 1.41 gigawatts of contracted critical IT capacity across five data center campuses. Its largest agreement is with AI cloud provider CoreWeave, along with investment-grade hyperscalers at Polaris Forge 2, Polaris Forge 3, Delta Forge 1, and Delta Forge 2.

2. IREN Limited (NASDAQ:IREN)

Short Interest as of October 30:  22.31%

Year-to-Date Gain as of November 12: -52.99%

Number of Hedge Fund Holders: 69

IREN Limited (NASDAQ:IREN) is a major player in the AI infrastructure market, but its ambitious expansion plans come with significant financial and execution risks. The company’s transition from Bitcoin mining toward high-performance computing (HPC) and AI cloud services has come with its fair share of risks. The stock has already shed more than 50% of its market value as it remains under pressure amid a broader sector selloff.

The selloff comes amid concerns that the company’s aggressive spending on HPC and AI cloud services could outpace revenue growth, even as it faces a considerable AI infrastructure opportunity. The risks have become more apparent as it delivered a first-quarter fiscal 2027 net loss of $263 million despite revenue increasing 66% sequentially to $228 million.

AI Cloud revenue surged 182% to $200 million. Still, IREN Limited also disclosed that its target of achieving more than $4 billion in annualized run-rate revenue had shifted from year-end 2026 to January 2027. Can Microsoft’s pact accelerate growth?

IREN plans approximately $15 billion in capital expenditure over the remainder of its fiscal year, while its capital commitments reached $18.95 billion at the end of September. Such spending leaves the company heavily dependent on financing markets, customer payments, and successful infrastructure deployment.

While IREN Limited may be a risky AI infrastructure stock to buy at this stage, its rapidly growing AI Cloud business and multibillion-dollar contracts offer considerable long-term potential.

1. TeraWulf Inc. (NASDAQ:WULF)

Short Interest as of October 30:  24.34%

Year-to-Date Gain as of November 12: 5.20%

Number of Hedge Fund Holders: 88

TeraWulf Inc. (NASDAQ:WULF) is under significant pressure due to weakness in the AI infrastructure sector and rising concerns about data center financing costs. While the stock is still up for the year it has lost nearly 40% in market value over the past six months, and short interest has surged to 24.34%, implying significant bearish positioning. Here’s why the stock is retreating.

TeraWulf Inc. has been shifting away from traditional Bitcoin mining toward higher-margin HPC and AI infrastructure leasing. However, this transition requires substantial investment, while new data center capacity takes time to become operational and generate revenue.

Despite the company securing major long-term AI hosting agreements backed by Google, investors are increasingly concerned about the substantial capital required to deliver these projects and when they will translate into sustainable profits.

TeraWulf Inc. estimates development costs of approximately $4 billion to $4.5 billion for its Hawesville, Kentucky campus and initial data halls. On November 4, it announced credit support agreements with Google relating to approximately $19 billion in contracted lease commitments.

Nevertheless, financial performance  continues to improve.  Third quarter revenue increased to $76.23 million from $50.57 million the same quarter last year.  The company also reported a net income of $709.9 million compared to a loss of $455.01 million  a year ago in the same quarter.

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