"Look, these guys are after a quick hit. I'd blow him off," he told CNBC's "Closing Bell." "I'd give Einhorn the back of my hand."
Welch said he had the same kind of problem with activist investors while heading GE. "They'd come after us, 'What are you going to do with all that cash?' Well, we're going to do a smart thing! Trust us!" Welch said.
Apple is in a vicious technology war with rivals big and small, and Welch said he thinks CEO Tim Cook should be given the space to run the company.
"He's got Samsung and everyone nipping at his heels. And he risks running, rather than a sexy company, a commodities company."
He said Apple needs to have the cash and the flexibility to move on an acquisition in a turbulent market.
"Apple deserves, after all they've done, a chance to deliver on all their promises," he said.
Welch also took some shots at the White House, saying the U.S. energy boom has the potential to power another "American Century" of economic dominance, if it weren't for the administration's heavy-handed regulations.
"We can't keep throwing sand in the gears of the economy," he said.
Welch said the cost of regulation under President Barack Obama is three-and-a-half times that of Bill Clinton's administration's first term and five times that of George W. Bush. And that's not counting Obamacare, he said.
The economy now is being buoyed by $85 billion from the Federal Reserve each month, but the downward pressure from regulation, he said, is "enormous."
He described the situation as a "regulatory morass."
"That is holding back this economy from really taking off," he said. "All the conditions are right to take off, if the regulatory burden could be taken down."
Welch was at GE's helm from 1981 to 2001, during which the company's value rose 4000 percent. In 2009, he launched the Jack Welch Management Institute, which is now part of Strayer University.
Correction: An earlier version of this article stated that the Jack Welch Institute is part of Chancellor University. It was acquired by Strayer University in 2011.
@Matt_Twomey on Twitter.