Economist Sounds Alarm on AI Hype, Says Nvidia’s Optimism Is Detached from Reality
The excitement surrounding artificial intelligence may have gone too far, according to economist Steve Hanke, who warned that the current boom echoes the euphoric peaks of previous market bubbles.
While investors continue to treat AI as the next great industrial revolution, Hanke argues the numbers don’t add up. “The revenue projections being tossed around are detached from economic reality,” he wrote on X, cautioning that inflated expectations could eventually collide with slower adoption and profitability challenges.
NVIDIA CEO Jensen Huang is probably blowing smoke.
The AI bubble is alive and well. The AI firms’ revenue forecasts are simply on another planet––one that will probably never be reached. pic.twitter.com/3o3pFASIVB
— Steve Hanke (@steve_hanke) November 2, 2025
Nvidia’s CEO Paints a Very Different Picture
The warning comes just days after Nvidia chief Jensen Huang gave one of his most upbeat speeches to date. Speaking at an event in Washington on October 28, Huang dismissed comparisons between today’s AI enthusiasm and the speculative excesses of the past.
Rather than a bubble, he called it a structural transformation — a global transition from general-purpose computing to accelerated computing. He claimed the industry is still in its early innings and that companies worldwide are “happily paying” for AI services because the technology now produces real economic value.
Economic Skepticism Meets Technological Faith
For Hanke, that kind of optimism is precisely what inflates bubbles. He argued that the market’s current obsession with AI has more to do with hype than with sustainable earnings. “We’ve seen this movie before,” he implied — a familiar reference to the dot-com and clean-energy frenzies, when investors chased visions of endless growth before profits ever arrived.
His remarks reignited debate among economists and traders over whether AI’s financial promise is being priced years too early. Some share his concerns, noting that AI companies, while transformative, remain highly capital-intensive and dependent on a small circle of big clients — especially in Nvidia’s case.
Nvidia’s Dominance May Be a Double-Edged Sword
Nvidia’s meteoric rise to the world’s most valuable company has been fueled by the relentless demand for its AI chips, which dominate data centers and cloud platforms. But that same dominance carries concentration risk. The firm’s revenues rely heavily on a handful of hyperscale customers, leaving it vulnerable if AI spending slows or expectations fail to materialize.
Market analysts warn that such dependency could amplify volatility, especially if macroeconomic conditions tighten or if enterprises delay AI infrastructure spending. For Nvidia, that would expose just how much of its valuation rests on continued optimism rather than guaranteed cash flow.
A Growing Divide in the AI Narrative
The back-and-forth between Huang’s confidence and Hanke’s skepticism captures a broader split between technology leaders and traditional economists. To one side, AI represents a generational breakthrough capable of reshaping industries. To the other, it’s a story of financial markets once again racing ahead of what the real economy can deliver.
As investors weigh those two extremes, the question remains whether AI will indeed fulfill its trillion-dollar promise — or become another cautionary tale of innovation outrunning profitability.
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Alexander Zdravkov is a person who always looks for the logic behind things. He has more than 3 years of experience in the crypto space, where he skillfully identifies new trends in the world of digital currencies. Whether providing in-depth analysis or daily reports on all topics, his deep understanding and enthusiasm for what he does make him a valuable member of the team.
