Are markets getting wary on AI spending? Here's what billionaire hedge fund founder David Einhorn thinks.

By Jamie Chisholm

More investors are starting to question the trillion-dollar pledges to build AI infrastructure

Turning point? Nvidia CEO Jensen Huang this week announced a $100 billion investment in OpenAI.

Stocks started the week with a fresh record high, but its been tough going since then, with the S&P 500 SPX slipping three sessions in a row for a 1.3% loss.

Identifying the direct cause of any wobble is of course often difficult, but the pullback coincided with some better-than-expected economic data that pushed bond yields higher.

Federal Reserve chief Jerome Powell's cautious comment on the prospects for more interest rate cuts and his talk of a highly valued stock market likely contributed to those moves, too.

However, there was also an arguably more existential issue fomenting for this bull market: a possible shift in attitudes to AI spending.

Turning points are often only clear in hindsight, but will Monday's CNBC interview with Jensen Huang and Sam Altman, in which Nvidia announced a $100 billion investment in OpenAI, go down in Wall Street legend as the moment when the market's questioning of its AI exuberance hit critical mass?

Three days later and billionaire hedge-fund manager David Einhorn was articulating what some are thinking.

Speaking Thursday evening on a panel discussion hosted by Simplify Asset Management at the New York Stock Exchange, the Greenlight Capital founder warned that the hundreds of billions of spending earmarked for AI infrastructure may demolish enormous amounts of capital, even if the technology transforms society.

Noting the planned unprecedented investments of companies like Meta Platforms (META), Apple (AAPL) and OpenAI, Einhorn questioned, according to Bloomberg, whether "spending a trillion dollars a year or 500 billion a year" will deliver good outcomes for the firms.

"The numbers that are being thrown around are so extreme that it's really, really hard to understand them," Bloomberg reported Einhorn saying. "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's questioning of investors' sanguine assumptions about the efficacy of AI-based capex dovetails with his longstanding complaint that markets are not functioning properly.

In January, for example, he pointed to the amount of money chasing esoteric crypto assets as evidence of a sustained inefficient allocation of capital, saying we may be in "the fartcoin stage of the market cycle." That's in reference to the memecoin created last year that surged to over a $1 billion in market value.

Einhorn also warned on Thursday that faltering U.S. job growth signaled an economic contraction may be coming. "I'm a little bit more of the view that we're heading into or have been in a recession...Jobs aren't growing and the workweek is shrinking and productivity is not that great," Einhorn said according to Bloomberg.

Meanwhile, the shifting AI zeitgeist could be seen in early Friday posts on X by Jim Cramer, CNBC commentator. In one, Cramer writes: I can no longer recall a positive article about the 'wisdom' of building out the data center network. I have read dozens of articles about the bubbles and the waste of moneys and the coming crash of the data center."

And Cramer also posted this:

The markets

U.S. stock-indices SPX DJIA COMP are higher at the opening bell as benchmark Treasury yields BX:TMUBMUSD10Y are little changed. The dollar index DXY is lower, while oil prices (CL.1) slip and gold futures (GC00) are trading around $3,782 an ounce.

   Key asset performance                                                Last       5d      1m     YTD     1y 
   S&P 500                                                              6604.72    -0.41%  1.58%  12.29%  14.96% 
   Nasdaq Composite                                                     22,384.70  -0.38%  3.13%  15.92%  23.06% 
   10-year Treasury                                                     4.173      4.20    -6.00  -40.30  41.90 
   Gold                                                                 3778.2     2.72%   8.67%  43.15%  40.19% 
   Oil                                                                  64.93      4.12%   1.44%  -9.66%  -5.41% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

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The buzz

The U.S. core personal consumption expenditure index, the Federal Reserve's favored inflation gauge, rose 0.2% month-on-month in August, and was up 2.9% over the year, both in line with analysts forecasts.

The final reading of the U.S. consumer sentiment survey for September is released at 10 a.m.

Fed officials making comments include Richmond Fed President Tom Barkin at 9 a.m. and Fed Vice Chair for Supervision Michelle Bowman at 1 p.m.

Global pharma stocks were under pressure Friday, after Donald Trump announced 100% tariffs on some medicines imported into the U.S.

Commercial vehicle-maker stocks, such as Daimler Truck (XE:DTG) in Germany, were lower after Trump also slapped a 25% tariff on truck imports.

Shares of Wayfair (W), RH (RH) and Williams-Sonoma (WSM) are lower after Trump announced 50% tariffs on kitchen cabinets and bathroom vanities and 30% tariffs on upholstered furniture.

The U.S. Justice Department has filed charges against former FBI chief James Comey just days after Trump said his opponents should be prosecuted.

Best of the web

Unusual trading ahead of crypto-treasury deals draws scrutiny from U.S. regulators.

Thomas Peterffy and Interactive Brokers: The making of a market maker.

And here's The Wall Street Journal's take on the AI debate. Spending on AI is at epic levels. Will it ever pay off?

The chart

For the fifth time in two years Nvidia shares (NVDA) have fallen into a sideways range after a sharp rally, notes Matthew J. Maley, chief market strategist at Miller Tabak. "In each of the other four cases, this sideways move has followed by a decline. Those declines from the high of the sideways range have been 17%, 20%, 27% and 36% for the stock," says Maley. Given Nvidia's weighting, such a retreat again may have negative implications for the broader market.

Top tickers

Here were the most active stock-market tickers on MarketWatch as of 6 a.m. Eastern.

   Ticker  Security name 
   TSLA    Tesla 
   NVDA    Nvidia 
   INTC    Intel 
   GME     GameStop 
   AMZN    Amazon.com 
   NIO     NIO 
   OPEN    Opendoor Technologies 
   AAPL    Apple 
   LAC     Lithium Americas 
   PLTR    Palantir Technologies 

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-Jamie Chisholm

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(END) Dow Jones Newswires

09-26-25 0930ET