• David Einhorn Sounds Warning on the AI Spending Splurge

Hedge fund manager David Einhorn cautioned that the unprecedented amount of spending on artificial intelligence infrastructure may destroy vast amounts of capital, even if the technology itself proves transformative.

The Greenlight Capital founder said the trillion-dollar build-out by companies overall, such as Apple Inc., Meta Platforms Inc. and OpenAI is so extreme that the eventual returns are highly uncertain. While he expects AI will ultimately surpass today’s bullish forecasts, he questioned whether “spending a trillion dollars a year or 500 billion a year” will deliver good outcomes for the firms making those investments.

“I’m sure it’s not zero, but there’s a reasonable chance that a tremendous amount of capital destruction is going to come through this cycle.”

Einhorn drew a sharp line between the long-term importance of AI and the immediate economics of funding it. He said many projects will be built, but investors may not see the payoffs they anticipate.