Month: October 2025

• Veteran economist Steve Hanke said the AI boom could end in disaster like the dot-com bubble.
• AI companies falling short of their growth forecasts could show the market is overheated, he said.
• “It might be wise to buckle your seat belt,” Hanke said.

Investors should buckle up as the AI boom could ultimately collapse like the dot-com bubble, veteran trader and economist Steve Hanke has said.

“As money pours into AI, it’s hard to know whether the market’s exuberance is rational or irrational,” Hanke, a professor of applied economics at Johns Hopkins University, said by email.

Federal Reserve Chair Alan Greenspan coined the term “irrational exuberance” in his famous description of the market mood as US stocks surged 13-fold between 1982 and 1999, fueled by immense excitement about technology and the internet.

Hanke, who was the president of Toronto Trust Argentina when it was the world’s best-performing market mutual fund in 1995, said that dot-com euphoria eventually hit irrational levels and “ended when the bubble popped.“

The tech-heavy Nasdaq index plummeted nearly 80% from its peak in March 2000 to its trough in October 2002, while the benchmark S&P 500 plunged around 45% over the same period.

Hanke, who was also economic advisor to President Ronald Reagan in the 1980s, said that the answer to whether the market is rational or irrational this time will “largely depend on whether the AI firms’ spectacular revenue forecasts hold water.”

Here are some of the key growth projections he was referring to:

• AI chipmaker Nvidia has said it expects revenue to grow by about 54% year on year this quarter to $54 billion. Its stock has surged around 12-fold since the start of 2023.
• OpenAI, ChatGPT’s parent company, has projected its revenue will more than triple this year to $13 billion.
• Oracle has projected its cloud infrastructure revenue to soar 14-fold to $144 billion in the five years to May 2030, dwarfing the enterprise-software company’s total revenue of $57 billion last financial year. Its stock is up around 240% since the start of 2023.

• Palantir expects its annual revenue to grow 45% this year to north of $4.1 billion, underpinned by at least an 85% jump in US commercial revenue to over $1.3 billion. Its stock is up about 27-fold since the start of 2023.

  Hanke signed off by cautioning investors of a bumpy road ahead.

  “It might be wise to buckle your seat belt,” he wrote.