Steve Hanke says there’s excessive buzz around AI — and it could end badly.
The veteran trader and economist told Business Insider by email that he agrees with Yann LeCun, Meta’s former chief AI scientist and a pioneer in the field, who’s warned that large language models (LLMs) such as ChatGPT just aren’t that revolutionary.
Hanke quoted a speech by LeCun in the spring of 2024, where he said: “We’re easily fooled into thinking they are intelligent because of their fluency with language, but really, their understanding of reality is very superficial.”
LeCun added that the chatbots have their uses but “on the path towards human-level intelligence, an LLM is basically an off-ramp, a distraction, a dead end.”
Hanke, a professor of applied economics at Johns Hopkins University, said he’s “on LeCun’s side of the court” and considers AI to be “overhyped and potentially dangerous.”
He told Business Insider last October that whether the market’s exuberance turned out to be rational or irrational would “largely depend on whether the AI firms’ spectacular revenue forecasts hold water.”
“It might be wise to buckle your seat belt,” he added.
Hanke was the president of Toronto Trust Argentina when it was the world’s best-performing market mutual fund in 1995. He also served as an economic advisor to President Ronald Reagan.
Believers and skeptics
Despite some recent jitters, the AI boom seems to be going strong with OpenAI reportedly close to raising north of $100 billion at a potential $850 billion valuation. ChatGPT’s maker crossed $20 billion in annualized revenue last year.
The so-called “hyperscalers” racing to build the infrastructure to power the AI boom have forecasted some truly mind-boggling outlays.
Meta, Amazon, and Alphabet recently projected that their capital expenditures for 2026 could reach a combined $520 billion, and Microsoft is also on track to invest more than $100 billion this calendar year.
LeCun recently departed Meta after working at Facebook and Instagram’s parent company for more than a decade. He left to found Paris-based AMI Labs and develop open-source AI that could truly comprehend and model the physical world, not just language.
Hanke isn’t alone in sounding the alarm on the AI boom. Michael Burry of “The Big Short” fame has warned tech giants are overinvesting in microchips that could quickly become obsolete, and could see disappointing returns.
Jeremy Grantham, a bubble guru and GMO’s long-term investment strategist, has cautioned that previous transformative technologies, such as railroads and the internet, were marked by initial bubbles that inevitably popped, and he expects the same to happen with AI.
However, AI champions from Elon Musk to Sam Altman have predicted the tech will supercharge productivity and generate huge profits, so the run-up in valuations is more than justified.
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