Is Nvidia-Backed CoreWeave's 195% May Rally A Massive Short Squeeze In The Making?

Benzinga
2025.05.28 14:53
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CoreWeave Inc, backed by Nvidia, has seen its stock surge nearly 195% in May, raising concerns of a potential short squeeze as short interest jumped from 18% to 45%. Despite impressive earnings and a $4 billion deal with OpenAI, the company reported a widened net loss of $314.6 million and plans to spend $23 billion in capital expenditures. The aggressive short activity, particularly in dark pools, adds to the uncertainty surrounding CoreWeave's valuation and future performance.

CoreWeave Inc CRWV, the Nvidia Corp NVDA-backed AI infrastructure upstart, has been on a tear—soaring nearly 195% over the past month and tacking on another 38% over the past five days.

But beneath the parabolic rise lies a swelling undercurrent of skepticism: short interest ballooned from 18% in late April to 45% last week, according to S3 Partners.

CoreWeave Stock Rally: Storm Before The Squeeze?

That kind of surge in bearish bets, coinciding with a triple-digit rally, has traders wondering if CoreWeave is ground zero for the market’s next big short squeeze.

Beth Kindig, tech analyst and founder of I/O Fund, spotlighted the squeeze potential, noting on X that CoreWeave's "150% rally in May has been met with surging short bets."

The sudden spike in short interest—nearly tripling—signals mounting conviction among bears even as bulls celebrate.

Read Also: CoreWeave (CRWV) Stock Hits All-Time High Amid AI Momentum, Strategic Deals

Backlog Bonanza Or Bubble Trouble?

What's fueling both the frenzy and the fear?

In mid-May, CoreWeave smashed its first earnings since IPO, reporting 420% year-over-year revenue growth and guiding well ahead of Wall Street's expectations.

The cherry on top? A new $4 billion deal with OpenAI, adding to an already staggering $25.9 billion backlog. Yet, CoreWeave also posted a widened net loss of $314.6 million, and plans to burn through up to $23 billion in capex this year.

That kind of aggressive scaling has drawn comparisons to high-beta tech names of the past—some of which soared, while others flamed out.

Dark Pools Add To The Drama

Meanwhile, short activity remains aggressive in off-exchange venues. As of May 27, FINRA data shows a 54.6% off-exchange short volume ratio, hinting that dark pool bears are still betting big.

So, is CoreWeave the next AI rocket ship, or just a hot potato in a crowded trade?

With Nvidia backing it and OpenAI betting billions, bulls argue it's the real deal. But with short interest piling up and valuation stretching into uncharted territory, a short squeeze—or a sharp reversal—could be just around the corner.

  • CoreWeave Stock Rises On Government Affairs Appointment: What’s Going On?

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