David Einhorn, the founder of Greenlight Capital, recently stated that current spending on artificial intelligence is “extreme” and could end up destroying a lot of capital during this economic cycle. Speaking during a panel at the New York Stock Exchange (ICE) hosted by Simplify Asset Management, Einhorn explained that the amounts being spent are so massive that they are hard to even comprehend. Indeed, he pointed to companies like Apple (AAPL), Meta Platforms (META), and OpenAI as examples of firms making huge bets that might not pay off in the long run.
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Even if AI lives up to the hype and outperforms bullish expectations, Einhorn warned that the returns on these investments are still highly uncertain. As a result, he questioned whether spending billions or even trillions of dollars each year would actually be worth it. For example, Nvidia (NVDA) plans to spend $100 billion to build data centers for OpenAI. At the same time, Microsoft (MSFT) recently agreed to spend $17.4 billion with Nebius Group (NBIS) over five years on AI infrastructure. Meanwhile, Alphabet (GOOGL) also plans to invest $9 billion in AI and cloud efforts through 2026.
Einhorn said that while many of these projects will get built, investors may not see the profits they are hoping for. In addition, he’s concerned about the broader economy, especially the job market. “I’m a little bit more of the view that we’re heading into or have been in a recession,” he said, pointing out that job growth is weak, the average workweek is getting shorter, and productivity isn’t improving much.
Which AI Stock Is the Better Buy?
Turning to Wall Street, out of the AI stocks mentioned above, analysts think that NBIS stock has the most room to run. In fact, NBIS’s average price target of $136.40 per share implies more than 27% upside potential. On the other hand, analysts expect the least from AAPL stock, as its average price target of $251.24 equates to a loss of 2.1%.
