Are Short Sellers Wrong About These 3 Semiconductor Stocks?

By Leo Miller | April 04, 2025, 8:45 AM

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Many investors believe a handful of semiconductor stocks are set to short-circuit.

Three U.S. chip stocks have 25% or more of their floated shares sold short, indicating a very high level of bearish sentiment among a certain group of investors. 

Despite heavy short interest in indie Semiconductor (NASDAQ: INDI), Rigetti Computing (NASDAQ: RGTI), and Impinj (NASDAQ: PI), a deeper analysis reveals long-term growth potential that short sellers may be overlooking. 

High Short Interest Ignores $7.1B Design Backlog

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First up is autonomous driving equipment stock indie Semiconductor, which makes chips for advanced driver assistance systems (ADAS). As of March 15, INDI has a whopping 27% of its floated shares sold short.

Contributing to the company's high short interest is the fact that indie’s revenue growth has fallen off a cliff. In 2022 and 2023, the company saw revenues rise by 129% and 101%, respectively. And then in 2024, revenues fell by nearly 3%.

This isn’t a problem exclusive to indie. Generally speaking, the automotive semiconductor market has been in a downturn in 2024 and is still trying to find a robust recovery. For example, NXP Semiconductors (NASDAQ: NXPI), a much bigger player in this space, saw its automotive revenues fall by over 4% in 2024. 

indie is well positioned when that recovery happens. As of Q3 2024, the company had a backlog of $7.1 billion in design wins. This is massive compared to the company’s $217 million in revenue in 2024. These design wins show the company’s prowess in developing advanced automotive technologies.

Once the auto industry gets out of its rut, indie will be able to start recognizing this backlog as revenue—but that will take years. Although no one knows for sure when this market will recover, indie saw positive sequential revenue growth in the last two quarters, indicating things could be turning around.

Rigetti Suffers From Quantum Computing Being in Early Stages

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Next is one of the most wildly trading stocks in recent memory, Rigetti Computing.

As of March 15, around 25% of the company’s floated shares are sold short. Quantum computing advancements by some of the world’s largest companies caused the stock to rise an astronomical 1450% in 2024 despite generating less than $11 million in revenue.

But this misalignment of returns and revenues has introduced a large amount of skepticism around this name that isn’t totally out of place.

Much of the enthusiasm around Rigetti comes from its first-of-its-kind quantum chip fabrication facility, built in 2017. Rigetti's manufacturing leadership in this space could help it become a huge player in quantum computing.

The company can not only use its fab to make its own chips, but it could also serve as a contract quantum computer maker as research around the technology increases. Rigetti is already doing a similar type of work with the United States Air Force Research Lab.

Many believe it will take decades before quantum computing has a transformative real-world impact, but Rigetti could benefit greatly along the way as a key resource for researchers.

Impinj: A Small Chip Stock With a Trillion-Item Opportunity

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Last up is chip stock Impinj. The short position in Impinj is large, equal to nearly 26% of the company’s floated shares.

Impinj shares went on a massive run from October 31, 2023, to October 10, 2024. The company’s stock rose 269% over that period, reaching an all-time high. However, since then, the stock has cratered down 62%.

Valuation concerns are likely a key sticking point for short sellers. The stock trades at a 64x price-to-earnings multiple. Much of the stock's recent decline comes as the company sees Q1 revenues falling from the prior year's quarter—a sharp contrast to Wall Street’s expectations for strong, continued growth.

Impinj makes small sensors that companies can use to track their inventory and other items. This gives Impinj a massive opportunity to help companies track these devices, both for more seamless inventory management and theft prevention.

Impinj estimates that companies could use its devices to track trillions of items—such as grocery store items, clothing, packages, and airline baggage—a year. The company estimates that it has penetrated less than 1% of this market. Therefore, despite the near-term setback, Impinj has a huge long-term opportunity to increase the size of its just $2.6 billion business.

(All return data is as of the April 2 close unless otherwise indicated.)

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