Nebius Group's Rising Short Interest and Implications for a Potential Short Squeeze

In the world of equity markets, short interest often serves as a contrarian barometer. When pessimism crystallizes into a significant portion of a stock's float being sold short, it can set the stage for a dramatic reversal-particularly if bullish catalysts emerge. For Nebius Group (NASDAQ: NBIS), the confluence of elevated short interest and recent positive developments suggests a compelling case for near-term price momentum driven by a potential short squeeze.

Short Interest as a Contrarian Indicator

As of December 2025, Nebius Group's short interest ratio stands at 2.76 days to cover, meaning short sellers would need just over two days of average trading volume to offset their positions according to data. This figure has risen sharply, with 33.07 million shares-15.47% of the float-currently shorted according to reports. Such levels, while not extreme by historical standards, indicate growing bearish sentiment. Short interest increased by 12.0% in November alone according to financial data, reflecting a surge in pessimism.

High short interest can act as a double-edged sword. On one hand, it signals skepticism about a stock's trajectory. On the other, it creates a structural vulnerability: if the stock rallies, short sellers may be forced to buy shares to cover their positions, triggering a self-reinforcing upward spiral known as a short squeeze. The risk is amplified when the days-to-cover ratio is low, as it is here, because it means short sellers have less time to adjust to adverse price movements according to market analysis.

Bullish Catalysts and Institutional Dynamics

Despite the bearish overhang, Nebius Group has delivered a series of bullish catalysts in late 2025 that could trigger such a squeeze. Most notably, the company secured a $3 billion, five-year contract with Meta Platforms to supply AI infrastructure according to official announcements. This partnership not only validates Nebius's technological capabilities but also provides a clear revenue runway. The stock rebounded 5.48% following the announcement according to market data, and institutional investors have taken notice: long positions held by 653 institutional investors increased by 10.23% in the most recent reporting period according to financial reports.

Financial performance has also been robust. Q3 2025 revenue surged 355% year-over-year to $146 million, driven by demand for AI chips according to earnings data. Meanwhile, the stock's 52-week gain of 230.08%-capped at a December 22 closing price of $93.23 according to market data-demonstrates strong investor confidence. These fundamentals create a fertile environment for a short squeeze, as rising prices could force short sellers to exit positions, further fueling upward momentum.

The Short Squeeze Playbook

The interplay between short interest and bullish catalysts is particularly striking. While 11.61% of the float was sold short as of November 28 according to financial data, institutional long ownership has grown concurrently. This divergence suggests a tug-of-war between bears and bulls, with the latter gaining ground. If Nebius continues to outperform expectations-say, through additional partnerships or earnings surprises-the short sellers' leverage will weaken, and the days-to-cover ratio could compress further, accelerating covering activity.

Historically, stocks with short interest above 10% of the float and low days to cover often experience sharp rallies when positive news emerges according to market analysis. Nebius's situation aligns with this pattern. The key question is whether the recent rally has already priced in these catalysts or if there is room for further appreciation. Given the stock's recent 4.5% pre-bell rise on December 1 according to market reports and its strong institutional backing, the latter seems plausible.

Conclusion

Nebius Group's rising short interest, while a sign of market skepticism, may ultimately prove to be a catalyst for near-term gains. The combination of a high short float (15.47%), a low days-to-cover ratio (2.76), and robust fundamentals-including a landmark Meta contract and explosive revenue growth-creates a scenario where a short squeeze could drive significant price momentum. For investors, this represents a compelling opportunity to capitalize on contrarian dynamics, provided the company continues to execute on its strategic and financial goals.