These 5 Beaten-Down Tech Stocks Could Catch Fire Next

Key Points

• High short-interest stocks, like those on this list, with robust revenue growth outlooks, are set up for short squeezes.
• Analyst and institutional trends align with rising share prices, putting pressure on short positions.
• Catalysts, including upcoming earnings releases, may trigger robust price increases before the end of the year.

Short interest is a powerful market force that can not only cap gains but drive share prices lower, but not always. Sometimes, even the short sellers get things wrong. Companies that look troubled really aren’t, and they set the underlying stock up for robust rallies.

The higher a stock’s price gets above the point of short sale, the more a short seller loses and the greater the impetus to close the position. If the short interest is sufficiently high, as it is with the technology stocks on this list, the scramble to buy shares and close positions can result in a supply deficiency that causes share prices to rocket higher.

SoundHound AI: Short-Covering Is Already Underway

The price action in SoundHound AI's NASDAQ: SOUN stock suggests that short-covering is already underway. The price action is up by 200% from the 2025 lows and 50% from the start of Q3, having broken through several critical resistance targets. It is likely to head higher due to factors including its robust deal pipeline, revenue growth, profitability, and positive analyst sentiment trends. They include increasing coverage, upgrades, a Moderate Buy rating, and price target increases.

The consensus lags behind the stock price as of early October, but the trend is pointing to the high-end range, which is likely to increase following the Q3 earnings report. The short interest in late September was over 30%, down from the recent peak but sufficiently high to produce a short squeeze and/or sustain a short-covering rally.

Tempus AI: Moving Past Critical Resistance

Tempus AI NASDAQ: TEM, whose short interest topped 27% in September, may see its uptrend accelerate due to short-covering as its price has crossed a critical resistance point. That point aligns with historical highs and sets the market up for a significant upswing, which could leave the market in the $130 to $140 range.

The trigger for this move could come with the Q3 earnings report, which is expected to include another 80% increase in revenue and favorable guidance updates. As it stands, the company’s growth is forecasted to slow, but it is likely to be cautious. The company is transitioning from a purely services business to an AI infrastructure provider for healthcare, an as-yet untapped AI sub-industry.

Market Support Improves for OpenDoor Technologies

OpenDoor Technologies' NASDAQ: OPEN short interest approached 27% in late September as short-sellers sold into the rally to cap gains. However, market support for this stock is rising, as evidenced by Jane Street’s recent purchases. Its stake is nearly 6% of the shares, and other institutions are also buying.

The institutional activity was bullish in Q2 and Q3, lifting institutional interest to over 62% even while analysts' sentiment soured. The catalyst for the short squeeze could be Q3 reporting strength; the analysts have set the bar low, with 83% having lowered their estimates during the quarter, and the consensus forecasts a significant contraction despite recent strength in housing data. Existing home sales increased in September as mortgage rates fell.

AST Space Mobile About to Unleash Revenue Strength

AST Space Mobile’s NASDAQ: ASTS 20% short interest is deserved due to its pre-revenue condition and execution risks. However, company updates reveal that its network of satellites is rapidly growing, and the outlook for coverage is solid, suggesting the fears were misplaced. The critical detail is that coverage is increasing with each launch, putting it on track to begin honoring contracts, billing, and recognizing revenue, which will be robust.

The company has contracts with the most major mobile carriers, in addition to the US government, which assures its position within the telecom industry. The consensus forecasts ASTS revenue to grow by over 2,500% in Q3, sustain a quadruple-digit pace for four quarters, then slow to a double-digit but still hyper pace for the following few years. 

Etsy Builds an AI Platform for Consumers

It is still in the early stages, but Etsy NASDAQ: ETSY is working to become an AI platform for e-commerce. Its latest move is a deal to embed ChatGPT into its checkout process, enabling a seamless experience for consumers. The analysts’ response to the news is favorable, including a price target increase from BTIG, which places this highly-shorted stock above a critical resistance point.

A move to BTIG’s $81 target would put this market into a technical reversal that institutions are supporting. MarketBeat’s data reveals that the institutions, which own nearly 100% of the stock, have been buying in 2025 and provide solid support near early October price points.