r/valueinvesting
Software sector Short interest has jumped almost 300% in the last year and MSFT by +70%
Software sector and MSFT short interest have surged significantly over the past year, with MSFT facing downside risk as collateral damage.
- Software sector (IGV) short interest has surged nearly 300% over the past year.
- MSFT short interest has increased by roughly 73% in the same period.
- The accelerating pace of shorting indicates growing bearish sentiment across the tech and software space.
has anyone else noticed the massive jump in short interest across software stocks?
MSFT short interest has increased from 51,170,267 shares a year ago to 88,696,120 shares today, a rise of 37,525,853 shares, or roughly 73%.
What's even crazier the software sector IGV went from12,031,367 to 47,656,578 shares short in the last year almost 300%.
This matters because Microsoft is almost 8% of IGV, in other words Microsoft is one of the largest positions exposed to the software short trade. and is basically collateral damage
https://www.nasdaq.com/market-activity/stocks/msft/short-interest
the funny thing it's not even slowing the latest data is showing it increase even faster
When the sentiment changes it will be quick. Just like google last year
Google was traded at a bigger discount but I would say there were more question marks around the business as search was considered on a collision course with AI (which was a legitimate concern at the time).
I feel like Microsoft went down mostly by virtue of being labeled "software". The part which the market may be going wrong - which would also apply to Amazon - is that cloud leaders may be very well placed to help all the companies that are already users of their traditional cloud solutions deploy AI solutions and run them. They could potentially do so without even having to pay an Accenture / IBM as these companies may increasingly try to automate all that.
I also think these guys can stop buying GPUs anytime they want so if anything they wouldn't be the bag holders if AI doesn't materialise - they'll just have to amortize $25bn a year for 4 years (that's 1/5 of their Net income). Comparatively the GPU and memory stock could go from hero to zero and be completely wiped out.
SaaS in 2028 after the hyper scaling settles. I see all of it trading in a range until then
Everyone in this thread is an idiot, especially OP. The short interest is still below 2% of the float. Wallstreetbets is unironically smarter than this subreddit because even they wouldn't fall for this post
What it means is it will ripp higher sooner than later
if the short intrest has grown this significantly does it not mean the stock is expected to go down?
In principle - yes. But if the trend shifts, then we'll likely see a short squeeze. That's when all the short guys rapidly need to close their position and thus create massive demand in a short amount of time, which makes the stock price explode.
It means we have an explanation why it already has gone down.
They are growing at 18% annually, the stock is already cheap and if it is going down further, then it is not a buy-the dip opportunity? buy
MSFT has billions of shares! Meaningless amount. All stocks will have some short interest! MSFT is minting money and will continue to do so!
Let’s fucking go my bags aren’t paperweight any longer
Sometimes it does (GameStop etc.) and sometimes it doesn't (alphabet/Google etc.). Fundamentally it depends if the perception of these businesses changes again or not
1% of the float to 2% of the float is a 100% increase. We don't describe it like that because it's absurd and a nothing burger. Saying 300% is 3x!!! But 3x of 0.5% of the float is still a nothing burger..
It’s all about the depreciation of datacenters built out over the coming years. They are literally spending hundreds to a trillion dollars on datacenters. There is no way in hell they can make this money back.
the % jump sounds scary, but the base matters. msft has a massive float and deep liquidity, so a 70% jump in short interest doesn’t hit the same as it would in a small cap. i’d care more about short interest as % of float and days to cover. without that, the “squeeze” angle feels more like a headline than a real setup.