Heavily Shorted Stocks Poised to Pop on Rate Cuts: Etsy, SoundHound AI, and NuScale Power

Three heavily shorted stocks, Etsy, SoundHound AI, and NuScale Power, could benefit from interest rate cuts. With the Federal Reserve set to cut rates, lower interest rates can ease funding, support valuations, and boost demand. High short interest in these names could amplify any upside surprise, potentially leading to a short covering rally or even a short squeeze. Each business has solid fundamentals and macro tailwinds that could drive long-term returns.

As the Federal Reserve gears up to cut interest rates, three heavily shorted stocks—Etsy (ETSY), SoundHound AI (SOUN), and NuScale Power (NSCL)—could experience a significant boost. Lower interest rates can ease funding costs, support valuations, and stimulate demand, potentially leading to a short covering rally or even a short squeeze. Each of these companies has solid fundamentals and macro tailwinds that could drive long-term returns.

Etsy (ETSY)
Etsy, an e-commerce platform for handmade and vintage goods, has seen its stock heavily shorted due to concerns about competition and market saturation. However, the company's recent integration of OpenAI's ChatGPT features, which include an instant buy option, has the potential to drive growth and increase demand for its platform OpenAI Rides High: A New Stock Market Behemoth Takes Shape^[1]. This development could lead to an increase in Etsy's stock price, especially if the Federal Reserve's rate cuts provide additional funding support.

SoundHound AI (SOUN)
SoundHound AI has been gaining traction in the enterprise AI market, particularly in the insurance sector. Its partnership with Apivia Courtage, part of AEMA Group, to deploy the Amelia 7 agentic AI platform has demonstrated the company's ability to deliver significant productivity gains. With the Federal Reserve's rate cuts, SoundHound AI could benefit from easier access to funding, potentially leading to further expansion and investment in its AI technology SoundHound Stock Gains From Apivia Courtage Agentic AI Deal^[2]. The company's stock has already seen a notable increase in the past three months, with a 53.7% rise, and this trend could continue with lower interest rates.

NuScale Power (NSCL)
NuScale Power, a company focused on small modular reactor (SMR) technology, has been facing challenges related to revenue timing uncertainty and project complexity. However, the company's recent partnership with ENTRA1 Energy and the Tennessee Valley Authority for up to 6 gigawatts of SMR capacity showcases near-term momentum for its commercialization goals. With the Federal Reserve's rate cuts, NuScale Power could benefit from easier access to funding, potentially accelerating its commercial deployment and reducing the risk associated with lengthy customer negotiations Should Fluor’s Partial Stake Sale Prompt NuScale Power (SMR) Investors to Rethink the Ownership Story?^[3]. The company's outlook anticipates $402.3 million in revenue and $42.2 million in earnings by 2028, based on analysts' assumptions.

Conclusion
While the Federal Reserve's rate cuts could provide a short-term boost to these heavily shorted stocks, investors should remain cautious and focus on the long-term fundamentals of each company. Etsy's integration of OpenAI's ChatGPT features, SoundHound AI's enterprise partnerships, and NuScale Power's SMR commercialization efforts are key drivers for their growth potential. As the Federal Reserve continues to monitor the economy, investors should closely watch the impact of rate cuts on these stocks and their respective industries.

References
OpenAI Rides High: A New Stock Market Behemoth Takes Shape^[1] Olumide Adesina. "OpenAI Rides High: A New Stock Market Behemoth Takes Shape." FXLeaders. October 6, 2025. [https://www.fxleaders.com/news/2025/10/06/openai-rides-high-a-new-stock-market-behemoth-takes-shape/](https://www.fxleaders.com/news/2025/10/06/openai-rides-high-a-new-stock-market-behemoth-takes-shape/)
SoundHound Stock Gains From Apivia Courtage Agentic AI Deal^[2] SoundHound AI, Inc. "SoundHound Stock Gains on Apivia Courtage Agentic AI Deal." Nasdaq. [https://www.nasdaq.com/articles/soundhound-stock-gains-apivia-courtage-agentic-ai-deal](https://www.nasdaq.com/articles/soundhound-stock-gains-apivia-courtage-agentic-ai-deal)
Should Fluor’s Partial Stake Sale Prompt NuScale Power (SMR) Investors to Rethink the Ownership Story?^[3] "Fluor Partial Stake Sale Prompts Interest in NuScale Power." Yahoo Finance. October 2025. [https://finance.yahoo.com/news/fluor-partial-stake-sale-prompt-131030972.html](https://finance.yahoo.com/news/fluor-partial-stake-sale-prompt-131030972.html)