Let the standard processes of education and research take their course. This student will probably not survive them to receive the degree, and that is as it should be. Tough love: warn, then let the system do its thing.

The central issue I see is that this student is clinging tenaciously to a goal of disruptive fame rather than a goal of advancing research. This happens; it's a difficult thing to screen out at the application stage (where unreasonable ambition is not entirely uncommon, and not usually a dealbreaker). You can suggest that this is an inappropriate goal, and it sounds as though you have -- but you can't force the student to hear, much less change.

I would be inclined to keep my interactions with this student as concrete and immediate-goal-oriented as possible. Have an agenda for every meeting, and pull the student back to it when a megalomanic rant is imminent. Deflect, e.g. "Yes, but when will you have {thing with imminent due date} done?" or "Interesting. Write that up into a conference abstract and submit it to {conference}."

You are well within your rights to "fire" the student as your advisee, I would think. I don't know how that works where you are (or whether it's even possible), but to some extent your students become part of your professional reputation, and this one will not reflect well on you.

A major part of good science, is not only performing good research, but also convincing others that your science is worthwhile. A common belief of researchers is that their job is done after they have proved their idea – now it is the community's turn to see how awesome their science is.^1,2

Maybe a first step is to make your student see this.

The next step would be that he works only on hypothesis/direction on which both of you agree: "if you cannot convince me that this hypothesis is correct, how can you convince the entire community"? To take off the personal issue (i.e., the feeling of your student that maybe he is smarter than you, and it is just you that don't understand), you can use his PhD committee, if you have such in your institution. If a committee of 3-4 established researchers don't understand "how brilliant his results are", this is a good indication that the rest of the community will not be able to understand it, and therefore, even if it is great science, it is futile.

The main thing in the above approach, is that it doesn't confront his ambitions, and doesn't (directly) say that his work is meaningless. Instead, it states that great work by itself is meaningless unless accepted by others. It would be great to channel his enthusiasm to the correct direction – but this direction must be provided, or at least guided by you (his advisor), this is what advisors are for.

References:
¹ Why is my theory not (yet) celebrated by scientific community?
² I believe I have solved a famous open problem. How do I convince people in the field that I am not a crank?

Note: I'm a PhD student so the following is based off of very limited experience.

You're in a very tough situation. It is likely that the student will end up spending a lot of time obsessing over their work and get brainwashed by their own ego and denial. On the other hand, Einstein himself was indeed regarded as a bit of a crackpot for a while (I believe his three famous 1905 papers were based on projects that he had proposed and were turned down - whether or not this is internet garbage is unbeknownst to me).

However, it certainly isn't a healthy mindset. I would not recommend counseling per se, purely because your student might see it as a soft form of rejection - and that will only make matters worse. They may feel pushed out, or told they have to conform to something they don't agree with. In extreme circumstances though, it may be necessary.

What I would then suggest is the following. I believe it is up to you to steer the project somewhat and to keep track of your student's progress. For the time being, it is probably wise to suggest an overall topic that they can (and must) work on. Strike a deal - they must progress in this project sufficiently within a certain time frame, then they can spend a week on forming the rigourous basis of their own theory, from the bottom up. After that week, you review their work and advise them on any pitfalls, and offer them another week on correcting them and extending it. If, after that brief time, they have not convinced you that it is an avenue worth exploring, they must repeat this process.

By the end, there's a good chance that they will have done sufficient work in your suggested topic to have something worthwhile, and you can get them out of your hair. There is a chance that they actually enjoy that topic enough to shift their perceptions. On the flipside, there is a small chance that they stumble across something interesting, and you'll both be on the cover of Time magazine. I did say small.

When a student believes they will surpass Einstein, it's crucial to balance encouragement with grounding in reality. Start by acknowledging their enthusiasm and ambition, as dismissing their passion outright may alienate them. However, redirect their focus toward foundational learning. Suggest they immerse themselves in peer-reviewed literature, coursework, and established theories to understand the complexity of physics before attempting to "refute" or replace them. Emphasize that even Einstein built on prior work and faced years of rigorous study. Next, propose a structured, incremental approach. Encourage them to tackle smaller, well-defined problems within their thesis scope rather than overly broad conjectures. Suggest collaborating with peers or other faculty to gain diverse perspectives and feedback, which can temper overconfidence and highlight knowledge gaps. If their work remains unfocused or flawed, recommend workshops, additional coursework, or independent study under guidance. Address their mindset by discussing the collaborative nature of scientific progress. Explain that breakthroughs often emerge from incremental contributions, not lone revolutionary leaps. Highlight examples of scientists who refined theories over decades. Set clear boundaries: if their work remains unsubstantiated, they must meet specific academic standards before continuing under your supervision. Finally, protect your time and reputation. If their projects persist in lacking rigor, consider limiting your involvement to formal advisory roles while urging them to seek mentorship elsewhere. Remember, your goal is to nurture growth while steering them toward productive, evidence-based research. Balancing empathy with firm academic standards is key to preventing further missteps.