Is the AI Boom Headed for a Bust? Insights from Economist Steve Hanke

Have you ever felt like you're on a rollercoaster ride with the stock market? Well, according to veteran economist Steve Hanke, the AI boom might just be the next big drop. Hanke warns that if tech companies miss their growth targets, we could be looking at a disaster similar to the dot-com bubble.

What Could Trigger the AI Bubble Burst?

The Risk of Overheating

Hanke points out that if AI companies fall short of their ambitious growth forecasts, it could be a red flag signaling that the market is overheated. This situation, if not managed carefully, could lead to a market crash.

Understanding Market Exuberance

The Irrationality Factor

Trying to decipher if the current AI market enthusiasm is based on rational or irrational grounds is like navigating through a maze. Hanke, an applied economics professor at Johns Hopkins University, draws a parallel to Alan Greenspan's concept of "irrational exuberance" during the dot-com era.

The Dot-Com Déjà Vu

Lessons from the Past

Remember the dot-com bubble that burst in the early 2000s? Hanke draws a striking comparison to today's AI frenzy, emphasizing the importance of not repeating past mistakes. The repercussions of inflated expectations could be catastrophic.

Forecasting the Future

Revenue Projections Under Scrutiny

Investors are closely eyeing key growth projections of major AI players to gauge the market's stability. Companies like Nvidia, OpenAI, Oracle, and Palantir have ambitious revenue forecasts that could either validate or shake the market's confidence.

Nvidia anticipates a significant revenue spike, with its stock reflecting high expectations for growth.
OpenAI projects a substantial revenue increase, showcasing the potential for rapid expansion.
Oracle's cloud revenue forecast is staggering, raising questions about the sustainability of such aggressive growth.
Palantir's revenue growth outlook is robust, especially in the US commercial sector, driving optimism among investors.

Hanke closes his insights with a cautionary note, advising investors to brace themselves for a potentially turbulent journey ahead. So, fasten your seat belts, folks!

Read the original article on Business Insider

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By: tmohamed@businessinsider.com (Theron Mohamed)
Title: Is the AI Boom Headed for a Bust? Insights from Economist Steve Hanke
Sourced From: www.businessinsider.com/steve-hanke-ai-boom-dotcom-bubble-tech-stocks-growth-forecasts-2025-10
Published Date: Wed, 01 Oct 2025 11:52:24 +0000