Australia led for most of the game and guard Adam Gibson had an open three-pointer as time expired which rattled around the rim but refused to drop, allowing Argentina to escape with a thrilling 74-72 win in Kayseri.
Hernandez candidly admitted the Boomers outplayed his men.
"If you ask me, Australia played better than Argentina," he said. "We had a better five minutes at the end, but apart from that they played better than us."
The win put Argentina on top of their group with a 2-0 record with three first-round games remaining, while the Boomers were in a logjam of four teams at 1-1.
Argentina hold the world's top ranking as they are the only team to finish in the top four at the past four major tournaments - the 2004 and 2008 Olympics, when they won gold and bronze respectively, plus the 2002 and 2006 world titles where they finished second and fourth.
They interrupted the established teams in the world game and Hernandez feels Australia may be about to do the same thing.
"Before the game some people asked me about Australia," Hernandez said.
"Argentina in the last ten years is a big shock to the rest of the world because everybody knows Yugoslavia, Serbia, Croatia, USA, European teams, but few people knew Argentina until around 2001.
"The last four big tournaments, Olympics Games and world championships, we're the only team to finish in the top four (every time).
"And I think Australia could be the next Argentina because they have young guys, big guys, a good coach (in Brett Brown) who knows his stuff and is passionate about basketball.
"So for that reason I celebrate this victory so much."
After a fortunate one-point win over Jordan to open the tournament, the young Australians showed what they are capable of against Argentina, leading at every change and rallying from a six-point deficit with 3:43 remaining to tie the scores.
They ultimately fell just short but with young guns Patty Mills, Joe Ingles and Aleks Maric, classy veterans David Andersen and Matt Nielsen, plus the injured Andrew Bogut to throw back into the mix, the future is bright.
"We're very disappointed to lose that game," Brown said afterwards.
"I'm happy for our players because they've put in an awful lot of work and I feel like tonight validates the work they've put in and the type of players they can be."
Next up is a German side coming off a thrilling double-overtime win against Serbia.
"We played a lot better defensively, hit a few more shots, but credit to Argentina they stuck with it, they're the No.1 team in the world," Ingles said.
"We had a shot to win it at the end of the game and unluckily it didn't go in."
James Dampney - AAP