Silicon Valley’s New Power Players Take on Wall Street

Like many executives before them, the leaders of today’s hottest tech companies are discovering a familiar adversary: short sellers.

These are the investors who bet against a company’s stock, wagering that its share price will fall. And while short selling has been part of financial markets for decades, it has a way of feeling deeply personal to founders and CEOs, especially those who see themselves as mission-driven builders rather than spreadsheet operators.

Recently, some of the most prominent figures in the AI era have made their frustration with short sellers public, continuing a long tradition of executive pushback against Wall Street skeptics.

Palantir’s CEO Loses Patience

Last month, Palantir CEO Alex Karp delivered one of the most pointed rebukes of short sellers in recent memory. Asked about investors betting against his company, Karp did not mince words.

“They could pick on any company in the world,” Karp said on CNBC. “They have to pick on the one that actually helps people, that’s actually made money for the average person, that is actually supporting our war fighters.”

That framing, of course, is contested. Palantir has long faced criticism for its work with US government agencies on surveillance, immigration enforcement, and defense-related projects. Still, Karp continued his tirade, accusing short sellers of claiming ethical motives while actively betting against what he called “one of the great businesses of the world.”

To Karp, the criticism wasn’t just financial; it felt ideological.

Sam Altman and Jensen Huang Join the Chorus

Karp isn’t alone. Sam Altman, the founder of OpenAI, has also faced skeptics questioning his company’s valuation.

While OpenAI remains private, Altman admitted during an October appearance on the Bg2 Pod that part of him wishes the company were publicly traded if only to challenge critics directly.

“There are not many times I want to be a public company,” Altman said, “but one of the rare times that it’s appealing is when those people are writing these ridiculous ‘OpenAI is about to go out of business’ articles. I would love to tell them they could just short the stock.”

NVIDIA CEO Jensen Huang has been more restrained, but his message was clear. During Nvidia’s November earnings call, Huang addressed mounting concerns about an AI bubble.

“There’s been a lot of talk about an AI bubble,” he said. “From our vantage point, we see something very different.”

Together, these comments reflect a broader tension between tech’s new power brokers and the financial skeptics scrutinizing their valuations.

A Longstanding Executive Grievance

The animosity toward short sellers is nothing new.

Tesla CEO Elon Musk has spent years publicly sparring with investors betting against his company. GameStop chairman Ryan Cohen once labeled short selling “un-American.” For founders who have poured years into building companies, the idea that someone is profiting from their potential failure can feel like a personal affront.

That reaction is understandable. But it also misses a key point: attracting short sellers is often a sign that a company has arrived.

Big Enough to Be Shorted

When a company is small and obscure, few bother betting against it. Short selling typically emerges once a firm grows large enough to matter.

Buying a stock is simple: you purchase shares and hope the price rises. Short selling, however, is far more complex and risky. An investor borrows shares from a broker, sells them on the open market, and agrees to return them later. If the stock price falls, the investor buys the shares back at a lower price and pockets the difference. If the stock rises, losses can be severe—in theory, unlimited.

For example, if an investor shorts 10 shares at $100 each and the price drops to $50, they make $500. But if the stock surges to $300, the investor loses $2,000. Unlike traditional investors, whose losses are capped at what they put in, short sellers face open-ended risk.

Shorting becomes even more dangerous with smaller companies, where limited liquidity can cause sharp price swings. If short sellers are forced to buy shares quickly to cover their positions, a process known as a short squeeze, prices can skyrocket. This is exactly what happened during the GameStop saga, which wiped out several high-profile hedge funds.

“Short sellers absolutely want to make sure they have plenty of liquidity,” said Ryan Kelley, chief investment officer at Hennessy Funds. “That’s why it’s so dangerous to short something pretty small.”

Growth Brings Scrutiny — and Derivatives

As companies grow, so do the financial instruments tied to them.

Larger firms attract deeper derivatives markets, options, swaps, and other complex tools that allow investors to take more nuanced positions for or against a stock. Short selling becomes easier simply because more shares are available to borrow.

“As companies get bigger, the derivatives market grows,” said Maurits Pot, founder of Tema ETFs. “And as that market grows, more people will take positions.”

Palantir, which has surged more than 1,700% since its IPO in October 2020, fits this pattern perfectly. Some investors may believe the company is overvalued or headed in the wrong direction. Others may simply be responding to technical factors related to its size and liquidity.

Either way, skepticism comes with scale.

Why Short Sellers Matter

Despite their unpopularity among executives, short sellers serve several essential roles in healthy financial markets.

A Check on Corporate Behavior

Short sellers often act as watchdogs, digging into financial statements, business practices, and executive decisions. In some cases, they’ve exposed outright fraud, accounting manipulation, or deceptive behavior. The downfall of pharmaceutical giant Valeant in 2015 was accelerated by short sellers who raised red flags long before regulators stepped in.

Even when wrongdoing isn’t involved, short sellers can call attention to flawed strategies, excessive spending, or unrealistic growth assumptions.

Kelley said.

“It’s important that people who strongly disagree with how a business is run can put their money behind that belief.”

A Counterweight to Hype

Short sellers also play a crucial role during bubble periods. When optimism runs unchecked and bullish narratives dominate, skeptics help challenge assumptions and temper excess enthusiasm.

Because short sellers risk unlimited losses, their bets often signal deep conviction. This dynamic can lead to more efficient pricing, forcing markets to grapple with uncomfortable questions such as how quickly today’s cutting-edge GPUs might become obsolete.

Liquidity and Market Function

Short selling also increases market liquidity. Shares lent to short sellers continue circulating, and when those positions are closed, the required buybacks provide exit opportunities for other investors.

Higher liquidity makes markets function more smoothly, allowing prices to reflect information more accurately and efficiently.

Not All Shorts Are Saints—But the Practice Matters

Of course, not every short seller operates in good faith. Some have been accused of spreading misleading information to drive stocks down, coordinating attacks, or profiting from fear rather than facts.

These bad actors make short sellers an easy target for executive outrage. But condemning the entire practice misses the point.

“The idea that you can’t short stocks impedes the natural functioning of markets,” Pot said. “Some companies are shorted for very good reasons.”

A Sign of Maturity, Not Malice

For CEOs like Alex Karp, being targeted by short sellers isn’t a sign of failure. It’s a sign of relevance.

When a company reaches a certain size, scrutiny follows. Opinions diverge. Capital flows in both directions. That tension is not a flaw; it’s a feature of mature markets.

Executives don’t have to like short sellers. But understanding their role may help founders see short-term interest for what it often is: proof that their company has made it to the big leagues.