• Traders betting against Nvidia lost $2.2 billion on Thursday, according to financial data firm S3 Partners.

• The chipmaker's stock saw a scorching rally this week after it reported glowing forecasts that beat Wall Street estimates.

• Nvidia is by far the most loss-making short year-to-date, per S3 Partners.

Short sellers who bet against Nvidia lost billions of dollars in a single day as the stock staged a stunning rally after the chipmaker released business forecasts that blew Wall Street estimates out of the water.

Traders who had shorted the shares incurred $2.2 billion in mark-to-market losses on Thursday alone as Nvidia's share price soared more than 24%, according to financial data firm S3 Partners.

So far this year, those who bet against the company lost an estimated $8 billion, as its shares more than doubled in price in 2023. The Santa Clara, California-based semiconductor firm's stock is by far the most loss-making short year-to-date, while Tesla is second at $5.8 billion and Apple at $5 billion, per S3.

Nvidia is still the fourth most-shorted stock in America, trailing behind Apple, Tesla and Microsoft, Bloomberg reported, noting that short sellers have wagered more than $9 billion on the chipmaker's share price falling.

However, short sellers have been ditching their positions – albeit at a loss. The number of Nvidia shares that these contrarian traders shorted fell by nearly 11% in the past month, and have plummeted around 23% so far in 2023, per Bloomberg.

"The inflection in Generative AI development is here," Goldman Sachs analyst Toshiya Hari said. The bank raised its price target from $275 to $440, and brushed aside the threat of competitors on the rise against Nvidia.

JPMorgan also doubled its price target for the stock to $500, and the firm said it expects more demand for AI tech to follow.

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