Investors doubts are rising over trillion-dollar AI infrastructure bets
Stocks began the week at fresh highs, but momentum quickly faded. The S&P 500 (SPX -0.50%) has now slipped for three straight sessions, down 1.3% in total.
The pullback coincided with stronger-than-expected economic data that pushed bond yields higher, Federal Reserve Chair Jerome Powell’s cautious remarks on rate cuts, and his warning about stretched equity valuations.
But a deeper issue may be emerging: skepticism over the staggering sums earmarked for AI.
The tone arguably shifted Monday, when Nvidia’s Jensen Huang and OpenAI’s Sam Altman revealed plans for a $100 billion investment during a CNBC interview—raising questions about whether Wall Street’s AI frenzy has reached its tipping point.
By Thursday, Greenlight Capital’s David Einhorn voiced what many have been whispering. Speaking at the New York Stock Exchange, he warned that the hundreds of billions pledged for AI infrastructure could end in massive capital destruction, even if the technology ultimately reshapes society.
“The numbers being thrown around are so extreme that it’s hard to grasp them,” Einhorn said, per Bloomberg. “I’m sure it’s not zero, but there’s a reasonable chance a tremendous amount of capital will be destroyed through this cycle.”
His doubts echo his longstanding criticism of market inefficiencies, from speculative crypto runs—once calling it the “fartcoin stage of the cycle”—to today’s AI capex surge.
Einhorn also pointed to weak job growth and shrinking workweeks as signals the U.S. may already be in recession.
Meanwhile, sentiment on AI has begun to sour elsewhere. CNBC’s Jim Cramer noted Friday on X that he has “read dozens of articles about the bubbles, the waste of money, and the coming crash of the data center,” adding he could no longer recall a single upbeat take on the wisdom of the buildout.
