MW Why David Einhorn's Greenlight prefers this tiny biotech over AI 'excitement'
By Barbara Kollmeyer
We just don't understand the AI numbers, says Einhorn's hedge fund
A biotechnology company is getting a bid from Greenlight Capital, which is steering clear of AI right now.
How big can AI spending get? In a hold-my-beer moment, Meta Platforms announced Wall Street's biggest-ever $27 billion private credit deal to fund a Louisiana data center.
It's not just us mere mortals trying to wrap our brains around these mind-boggling numbers, as one of the world's biggest hedge funds seems dumbfounded. In our call of the day, the $2 billion-plus Greenlight Capital hedge fund explains why it's "refusing to participate in the excitement" of AI and the one stock it has much more faith in.
About a month ago, Greenlight's billionaire hedge-fund manager David Einhorn described AI spending numbers as "so extreme that it's really, really hard to understand them." A respected voice on Wall Street, Einhorn advised shorting Lehman Brothers a year before its collapse in the global financial crisis.
Granted, it's been a tough year for Greenlight, which revealed in its third-quarter letter that after a 3.6% quarterly loss, its funds are up just 0.4% against 14.8% for the S&P 500 SPX in 2025.
Einhorn's public thoughts are echoed in the letter that states that "when it comes to AI, doing math is essential. The figures simply must add up, and right now the math is...challenging."
Citing a McKinsey & Company number that estimates $6.7 trillion will be spent on data centers globally through 2030, Greenlight expects hefty leverage will be needed to fund it. It also reflects on one figure estimating $2 trillion in revenues are needed by 2030 to generate an adequate return on investments.
"Something's got to give," the firm said, highlighting that the phenomenon that popped the internet bubble - "the last buyer buying and the last short seller covering" - was impossible to predict.
The hedge fund admits it's been tough work outside of this theme, with 2025 marking as "a good year for the S&P 500 and a great year for the few dozen companies central to the AI story. It has been harder to make money on long investments outside of this ecosystem, because most of the rest of the economy has been floundering."
No regrets though: "While others are doing better than us for the time being, many are taking risks that we find hard to get comfortable with."
As for their strategy: "This remains the most expensive market we have experienced, and we don't see a better option than continuing to be cautious."
The hedge fund hailed a small investment in biotech Coya Therapeutics (COYA), which has just began clinical trials for treatment of Lou Gehrig's disease. Greenlight, which is Coya's biggest shareholder, remarked that if trials are successful, the treatment has an "excellent chance" of getting fast-tracked by the Food and Drug Administration.
And "at a time when AI-related business plans that are not much more than a PowerPoint presentation are being funded at multibillion-dollar valuations, we'd prefer to speculate on COYA at a $100 million valuation."
Greenlight also said it built a medium-sized stake in California utility Pacific Gas & Electric $(PCG)$. Expecting state support for a fund after devastating wildfires, the hedge fund expects PCG shares will recover and close its discount versus the sector.
One plus for the hedge fund's tough quarter was gold's rally, which boosted shares of Green Brick Partners (GRBK), though much of those gains were offset by a housing hedge it had in place.
The hedge fund said it exited Teck Resources $(TECK)$ with a big gain, expressing disappointment with its coal spinoff and merger of equals with Anglo American (UK:AAL).
Read: Here are 5 mounting risks that could hurt the S&P 500, according to BofA
The markets
U.S. stock futures (ES00) (YM00) (NQ00) are modestly higher, with the 10-year Treasury yield BX:TMUBMUSD10Y hovering around the year lows of 3.961%.
Key asset performance Last 5d 1m YTD 1y S&P 500 6735.35 1.37% 1.18% 14.52% 15.11% Nasdaq Composite 22,953.67 1.92% 1.68% 18.86% 23.59% 10-year Treasury 3.972 -6.10 -18.00 -60.40 -27.10 Gold 4149.7 -1.78% 10.12% 57.23% 52.05% Oil 58.27 -0.82% -10.09% -18.92% -17.98% Data: MarketWatch. Treasury yields change expressed in basis points
The buzz
Netflix shares $(NFLX)$ are down after the streaming provider's profit disappointed due to a one-time Brazil tax issue, but was upbeat on its look ahead.
An earnings miss is also hitting shares of Mattel $(MAT)$, though the toy maker sees a decent holiday season ahead.
Tesla $(TSLA)$ earnings are due after the close.
Fed governor Michael Barr is speaking at 4 p.m.
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The chart
The chart from Duality Research reflects on a wild day for gold (GC00), in which the precious metal marked its biggest one-day percentage drop since June 20, 2013 of 5.7%. As Duality notes, gold could now be setting up for a period of consolidation, or trading in a tight range.
Top tickers
These were the top-searched tickers on MarketWatch as of 6 a.m.:
Ticker Security name BYND Beyond Meat TSLA Tesla NVDA Nvidia INFY Infosys NFLX Netflix GME GameStop TSM Taiwan Semiconductor Manufacturing AAPL Apple AMZN Amazon AMD Advanced Micro Devices
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-Barbara Kollmeyer
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October 22, 2025 06:48 ET (10:48 GMT)
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