With some of the early hype around artificial intelligence stocks starting to lose steam, short interest in the North American IT sector rose to 3.81% at the end of March 2024, its highest level in the past 12 months, according to data from S&P Global Market Intelligence.
By comparison, short interest in information technology stocks was 3.65% at the end of February 2024 and 3.21% at the end of March 2023, indicating that short sellers continue to increase their positions in the sector.
Overall, the IT sector was the fourth most shorted sector in the economy as of the end of the month.
C3.ai Inc. saw short interest drop 210 basis points month over month to 26.9%, but it still ended March as the most shorted IT stock.
The enterprise AI application software company on Feb. 28 reported total revenues of $78.4 million for its fiscal third quarter ended Jan. 31, up 18% from the $66.7 million it reported in the comparable quarter a year ago. CEO and Chairman Thomas Siebel said the quarterly revenue exceeded the company's guidance range, attributing this to C3.ai's "first mover advantage in Enterprise AI."
Analysts had expected C3.ai to report $76.14 million in revenue.
Despite stronger-than-expected revenue growth, the company had an adjusted loss from operations in the quarter of $25.8 million, wider than the $15.0 million it reported in the year-ago quarter. C3.ai reported a GAAP net loss of 60 cents per share.
The company also announced it appointed former Ernst & Young LLP executive Hitesh Lath as CFO, replacing Juho Parkkinen, who had held the role since 2021.
MicroVision Inc. was the second most shorted IT stock in March at 24.4%, followed by Applied Optoelectronics Inc. at 23.7%.
MicroVision disclosed Feb. 28 that its revenue for the fourth quarter ended Dec. 31, 2023, was $5.1 million, compared to zero for the comparable quarter a year ago. Microvision noted that this revenue came primarily from its contract with Microsoft Corp. and that no new cash was received in connection with this contract; rather, the revenue was recognized against cash that had been received in an earlier period. Microvision's net loss was $19.7 million compared to a net loss of $13.5 million in the fourth quarter of 2022.
The company, a provider of sensors used in automotive software, initiated a $150.0 million at-the-market equity offering in March.
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PowerFleet Inc. saw the greatest increase in short interest month over month. The company ended March at 19.3% short interest, up about 560 basis points from 13.7% as of the end of February.
The company disclosed at the end of February that it received shareholder approval for a business combination deal with MiX Telematics Ltd., which closed in April.
SoundHound AI Inc. also saw a more than 500 basis point increase in short interest month over month. The company ended March at 18.4% short interest, up from 13.2% at the end of February.
SoundHound shares tumbled in March and April, down almost 43% over the two-month period. The company, which develops voice AI technologies, said in April that it would sell up to $150 million in stock.
The drop in March and April followed a boost for SoundHound shares in February after NVIDIA Corp. disclosed it had purchased a $3.67 million stake in SoundHound.
Overall, semiconductor materials and equipment companies were the most-shorted IT stocks in March, with 5.05% short interest, followed by semiconductors companies with 4.91%. Electronic manufacturing services stocks were the least-shorted IT stocks during the month.