This topic is heavily debated among fans. I don't believe David created the Xenomorphs, rather copied the Engineer's version of them. Here are my thoughts on the topic. Feel free to add or debate details.
When Captain Dallas first examines the Space Jockey on LV-426, he comments that the creature is fossilized, indicating it has been dead for "a long time". This suggests that the Derelict crashed thousands of years earlier, and at the very least needed thousands of years to become fossilized. The outward bent bones would indicate a chest burster was the cause of death, which does not line up with the time-line of Prometheus or Alien Covenant. I believe David copied the design concept of the Xenomorphs from the Engineers, or reverse engineered the face huggers from data or research acquired from the Engineers. Its possible the Xenomorphs weren't even created by the Engineers, rather had been used by them as a biological weapon (as was described in Prometheus). A possible explanation is that the Xenomorphs are from another part of the Universe entirely and were discovered by the Engineers long before humans evolved into what we are today. I welcome thoughts on the matter!
I do think that Planet 4 was the Engineer home planet , however I do not think that is the full story.
The 'city' where the goo was aerosolised over was actually a citadel, and the aggressive mutagen quickly spread across the rest of the planet, wiping out the rest of the population living in more urban or developed areas.
It could also be a sacred ground or centre of power. David was likely able to quickly calculate the most effective point of deployment of the payload, so this was probably not a mistake even if it appeared like one.
After all, that is precisely the design of the derelict, to completely wipe out a whole planet with one payload, so this seems to have done exactly what it was purposes for.
2. The destruction of the home planet severely handicapped the race as a whole.
I have faith that we will see the Engineers again, and I hope they have a showdown with David. It's possible a hero Engineer tries to stop David from delivering the ovomorphs to earth but is impregnated in the process, and only makes it to LV-426, or a 'surviving' Engineer hijacks the ship to finish the job they had started only to confront one of David's (?) facehuggers, and, not realising he is pregnant, wakes up and tries to complete the journey.
No matter what you think about Ridley and the Prometheus arc thus far you have to admit that there is so much room for activities with this background storyline.
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