AI Stock Valuations Are a Bubble, Says India’s Chief Economic Advisor

Artificial intelligence (AI) has added trillions of dollars to global stock market valuations and turned AI companies like Nvidia, OpenAI, and Anthropic into Wall Street’s hottest trade. But India’s Chief Economic Advisor (CEA) Dr. Anantha Nageswaran called current AI-related stock valuations a “bubble.” 

Also added that fears of AI replacing large numbers of workers are being exaggerated by companies eager to attract capital.

India’s CEA: “AI Valuations Are A Bubble”

Speaking in an interview with Indian news media ANI, Nageswaran drew a clear distinction between AI’s real technological potential and the market enthusiasm surrounding it.

“AI-related stocks and AI-related valuations are definitely a bubble. There is no question about it.”

The statement comes at a time when investors continue pouring billions into AI-focused companies. NVIDIA, for example, recently became one of the world’s most valuable companies with a market cap of $4.7 trillion as demand for AI chips surged, while startups and public firms alike are racing to position themselves as AI leaders.

Nageswaran also said that much of the excitement is being driven by companies trying to get higher valuations before raising funds or going public.

“Some of this hype is created by AI companies because they need to create the market value because they’re going public.”

Why The AI Hype Keeps Growing

Further in the interview, when asked why the hype around AI is growing so rapidly.

Nageswaran replied that many AI companies are promoting a future where productivity rises sharply while labor costs fall significantly.

“AI as a technology capable of suddenly reducing employee costs, creating a narrative that appeals to investors searching for future profit growth.”

In his view, that narrative may be helping inflate valuations beyond what current AI capabilities can justify.

Will AI Really Replace Workers?

The second major claim from Nageswaran challenges one of the biggest fears surrounding AI.

While he acknowledged that certain technology and IT-related skills could become obsolete, he argued that predictions of widespread job destruction remain far from certain.

“Whether it will be a massive disruptor in terms of employment, I think the jury is still out.”

He compared AI’s impact to previous technological revolutions that eliminated some jobs while creating entirely new categories of work.

His warning is not that AI lacks value. Instead, he believes meaningful discussions about AI’s long-term impact on productivity, jobs, and economic growth can only happen after today’s investment hype cools down.