Tech Wreck 2025: How Tesla and Nvidia Became Cash Machines for Bears

Short-sellers cash in as Tesla and Nvidia tumble—$15 billion in profits signal a brutal reckoning for Big Tech.

Editorial Team (ET)July 27, 2025

In a year marked by sharp downturns in high-profile tech stocks, short sellers have seized a golden opportunity. The market's relentless volatility has given bearish investors a significant payday, with Tesla (TSLA) and Nvidia (NVDA) at the center of their biggest wins. According to data from S3 Partners, short-sellers have raked in a staggering $15 billion in profits, driven by Tesla's steep 40% year-to-date drop and Nvidia's struggles in the wake of intensified global competition.

Tesla short-sellers have seen nearly $11 billion in returns, as investors grow wary of CEO Elon Musk’s deepening involvement in government policy. His role alongside President Donald Trump has raised concerns about Tesla’s future, with many questioning whether Musk's political associations might alienate consumers. Meanwhile, Nvidia, once the undisputed AI chip leader, has faced a crushing blow after Chinese competitor DeepSeek introduced a more affordable AI model. The result? Over $4 billion in short-selling gains for those who bet against the semiconductor giant.

The Magnificent Seven Under Pressure

It’s not just Tesla and Nvidia feeling the pain. The so-called “Magnificent Seven” stocks, which include Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN), and Meta (META), have collectively underperformed the broader market in 2025. Apple, for instance, has dropped nearly 14% this year, delivering short-sellers another $5 billion in profits.

Investors are now questioning whether these tech giants can sustain their past growth. Big Tech’s aggressive push into AI has led to ballooning expenses, and Wall Street is growing skeptical about whether these bets will translate into future profitability. With economic uncertainty looming and Trump’s tariff policies putting pressure on global supply chains, investors have begun to reassess the long-term value of these once-dominant stocks.

A Reckoning for AI and Big Tech

For the past two years, tech stocks were the hottest trade on Wall Street. Now, that trade is unwinding. The AI boom that fueled Nvidia’s meteoric rise has hit a speed bump. Investors, once dazzled by promises of unlimited AI-driven growth, are now taking a hard look at whether these companies can justify their massive spending. Nvidia’s recent drawdown, following the emergence of cheaper Chinese alternatives, underscores this shift.

Apple and Microsoft, once seen as safe bets, are now underperforming the S&P 500 at the worst levels since 2022. The idea that these tech titans were impervious to market cycles is crumbling. Investor sentiment is changing rapidly, and short sellers are cashing in on the fallout.

The Road Ahead for Tech Stocks

Despite the brutal start to 2025, the big question remains: will investor appetite for tech stocks return? Many analysts believe that the sell-off may be overdone. BMO Capital Markets chief investment strategist Brian Belski recently told Yahoo Finance that while these stocks may have gotten ahead of themselves, they remain essential to the U.S. market’s long-term growth trajectory.

“These are monster companies that define the growth trajectory for the United States stock market,” Belski said. “They are not going away.”

Still, the market is at a crossroads. If AI spending proves to be more of a long-term play than a short-term profit driver, investors may continue to pull back. Short-sellers have already made billions, but if history has shown anything, it’s that tech stocks have a way of bouncing back. The coming months will reveal whether this sell-off is just a bump in the road or the start of a more significant shift in market dynamics.

Conclusion

The 2025 market downturn has been a dream scenario for short-sellers, with Tesla and Nvidia leading the charge downward. Economic concerns, political turbulence, and shifting investor sentiment have all contributed to the biggest short-selling gains in years. While the future remains uncertain, one thing is clear—Wall Street's love affair with Big Tech has cooled, and short-sellers are enjoying their moment in the sun.

TeslaNvidia

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