The FAANG stocks — Facebook Inc. (FB), Apple Inc. (AAPL), Inc. (AMZN), Netflix (NFLX) and Google parent Alphabet Inc. (GOOGL)  — may be behind much of the rally in stocks this year, but there are still a lot of investors betting the share prices of the group will decline with short interest surging in the past year.  

Citing data compiled from financial analytics firm S3 Partners, Bloomberg reported investors have shorted about $37 billion in FAANG stocks, which is 42% higher than a year ago. Among the FAANG stocks, Amazon is the most shorted with $10 billion in short interest. With Apple becoming the first U.S. company to surpass the $1 trillion in market capitalization, all eyes are now on Amazon. 

The S3 data also shows tech companies account for half of the 10 most-shorted stocks in the world with Alibaba Group Holding Ltd. (BABA), the Chinese e-commerce giant, in the lead. (See more: Amazon to Hit $2.5 Trillion by 2024: MKM.)

Run-up Leads to Short Bets Increase

Ihor Dusaniwsky, head of research at S3 Partners, told Bloomberg that given the run-up in prices of the FAANG stocks this year, it's not too surprising that short interest is rising. It doesn’t help that the bull market could be entering the late stage, leaving investors positioning for a potential selloff in stocks. Not to forget price-to-earnings ratios on the FAANG stocks, which are several times higher than long-held averages. Bears argue the high valuations of the group and the fact that the gains are concentrated in a small number of stocks will hurt the broader market. (See more: Why Bulls Say Worries About FAANG Stocks Valuations Are Overdone.)

Investors Still All-In With Tech

The increase in short interest for the leading technology companies also comes at a time when stocks in the U.S. continue to set new records. Bloomberg pointed to the Nasdaq Composite Index, which is heavily laden with tech stocks, for one example. Earlier this week, it moved above 8,000 for the first time ever. The FAANG stocks have been behind 48% of the Nasdaq’s move higher this year, noted Bloomberg. .

Despite rising short interest, portfolio managers are still smitten with technology and internet stocks. Bank of America Merrill Lynch last month said that of the 11 major S&P 500 industry sectors, the average fund manager has 1.2% of holdings in tech and internet stocks.