David Einhorn, founder of hedge fund Greenlight Capital, has warned that the massive spending spree on artificial intelligence (AI) infrastructure could lead to significant capital destruction, even if the technology ultimately proves transformative, according to a report by Bloomberg.

Speaking at a panel hosted by Simplify Asset Management at the New York Stock Exchange, Einhorn highlighted that firms including Apple, Meta and OpenAI are investing at an unprecedented scale – potentially hundreds of billions to trillions of dollars annually. While Einhorn expects AI to exceed current bullish forecasts in the long run, he questioned whether such extreme expenditures will generate commensurate returns for investors.

“The numbers being thrown around are so extreme that it’s really, really hard to understand them,” he said. “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 contrasted the long-term promise of AI with the immediate economics of funding it, suggesting that many projects may be built, but investor payoffs could fall short. He cited Apple’s $500bn domestic spending plan over the next four years, as well as Meta’s and OpenAI’s multi-hundred-billion-dollar infrastructure ambitions, as examples of potential overreach.

Beyond AI, Einhorn flagged broader economic risks, pointing to weak job growth and stagnant productivity as warning signs of a potential recession. “Jobs aren’t growing and the workweek is shrinking and productivity is not that great,” he said. He also reiterated his view that structural issues in the markets have undermined the investment process.

You can read more on this from HedgeWeek, here.