We recently published a list of 12 Most Shorted Stocks in 2025. In this article, we are going to take a look at where Aehr Test Systems, Inc. (NASDAQ:AEHR) stands against other shorted stocks in 2025.
Reuters reported that President Trump’s tariffs have impacted the broader stock markets, weighing on investors’ sentiments, as worries related to the economic slowdown drove a market sell-off which wiped out ~$4 trillion from the S&P 500’s peak last month, when the markets cheered Trump’s agenda. New Trump policies have resulted in increased uncertainty for businesses, consumers, and investors.
Average Short Interest Saw a Decline
Reuters, while highlighting the comments made by Peter Orszag (CEO of Lazard), mentioned that the uncertainty which is created by tariff wars regarding Canada, Mexico and Europe continues to prompt the top executives to reconsider the forward-looking strategies. Furthermore, while the tensions with China remain understandable, investors are confused with worries related to Canada, Mexico, and Europe. If this doesn’t get resolved over the next month or so, there can be real damage to the broader economic prospects of the US and M&A activity, says Orszag.
As per S&P Global’s long/short report (February 2025) dated February 14, the average short interest throughout US equities fell to 76 basis points over the month. However, short interest increased throughout several sectors during the period. That being said, Consumer Durables saw a 5-bps rise and REITs encountered a 4-bps increase. Notably, the largest decreases were seen throughout the Household and Personal Products sector (-7 bps), and the Consumer Services (-6 bps) sectors.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Trends in US Short Selling
The US markets have reversed their January rally with a weak February, says Ihor Dusaniwsky (Managing Director of Predictive Analytics). On February 28, Dusaniwsky stated that markets are down for the year, with the Nasdaq index seeing the brunt of the sell-off. The US short sellers were down $45.8 billion (3.42%) in January mark-to-market losses. Notably, two-thirds of every dollar shorted in January remained unprofitable and only 33% were profitable. With markets trending downward, there has been an increase in short selling throughout most of the sectors in the US/Canadian markets, says Dusaniwsky. If the weakness in the market continues, there can be increased short selling.
Our Methodology
To list the 12 Most Shorted Stocks in 2025, we used a screener and shortlisted the most shorted stocks. Next, we mentioned the hedge fund sentiment around each stock. Finally, the stocks are arranged in ascending order of their hedge fund holdings, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A man in black suit holding a tablet looks at stock market data on a monitor. Photo by Tima Miroshnichenko on Pexels
Aehr Test Systems, Inc. (NASDAQ:AEHR)
Number of Hedge Fund Holders: 15
Short % of Shares Outstanding (as of February 28): ~24.1%
Aehr Test Systems, Inc. (NASDAQ:AEHR) specializes in semiconductor test and burn-in equipment, mainly for silicon carbide power semiconductors as well as memory devices. The company’s products support manufacturers in spotting defects and improve the reliability of semiconductors, which are utilized in EVs, data centers, 5G infrastructure, and industrial applications. Its Q2 2025 report consisted of key highlights, including the strategic expansion into AI processor and gallium nitride (GaN) markets. The company has secured the first AI processor customer for wafer level burn-in, using the new high-power FOX-XPTM solution for wafer level production test and burn-in of AI processors. Furthermore, Aehr Test Systems, Inc. (NASDAQ:AEHR)’s management is optimistic regarding the growth opportunities, thanks to advancements in AI, GaN, and data storage markets.
Aehr Test Systems, Inc. (NASDAQ:AEHR) also continues to expand its presence in the silicon carbide power semiconductor market, which is a critical sector for power conversion for EV traction inverters, charging infrastructure, and several industrial, data center, and infrastructure applications. The company remains well-placed in this market given its large customer base. Also, Aehr Test Systems, Inc. (NASDAQ:AEHR) is currently engaged in benchmarking efforts with multiple potential new silicon carbide customers globally, including in China. The company can capitalize on the higher demand for semiconductor reliability throughout various industries. Given its strong customer engagements and innovative solutions, it can achieve sustainable growth.
Overall, AEHR ranks 11th on our list of most shorted stocks in 2025. While we acknowledge the potential of AEHR as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than AEHR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
