Chris Wood, Global Head of Equity Strategy at Jefferies, warns of massive capital destruction in the US artificial intelligence sector. He describes the $695 billion in capital expenditure guidance issued by US hyperscalers for 2026 as “malinvestment,” a figure projected to rise to $870 billion in 2027. Chinese open-source AI models processed 36.39 trillion tokens during the week ending July 19, 2026, compared to just 7.39 trillion for top US models over the same period, while costing roughly one-quarter per token. Wood also highlights the industry’s shift toward debt financing over cash funding, which he says could transform capital destruction risk into credit risk.
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