Paul Tudor Jones, the billionaire hedge fund manager who shot to fame by predicting and profiting from the Black Monday stock market crash of 1987, said the artificial intelligence-driven rally still has significant room to run but warned that the eventual correction could be severe.
Jones, who is the founder and chief investment officer of Tudor Investment Corporation, one of the most successful macro hedge funds of the past four decades, told CNBC's Squawk Box on Thursday that he had recently increased his holdings in AI-related stocks, though he declined to name specific positions.
He is one of the most closely watched voices in global markets. Tudor Investment, which Jones founded in 1980, pioneered the use of quantitative and macro trading strategies and has delivered consistently strong returns over more than 40 years.
Jones is also the founder of the Robin Hood Foundation, one of the largest anti-poverty charities in New York, and chairs Just Capital, a nonprofit that ranks publicly listed US companies on social and environmental metrics.
His comments carry particular weight because he has a track record of identifying turning points. In 1987, Jones and his team predicted the crash that wiped 22% off the Dow Jones Industrial Average in a single day, turning a large profit while most of Wall Street was blindsided.
He has since called several major market inflexions, including a warning in October 2025 that the ingredients were in place for a speculative "blow off" top before the cycle ends.
On Thursday, Jones drew a direct comparison between the current AI moment and two earlier technology inflexion points that reshaped the global economy.
He likened the launch of ChatGPT and Anthropic's Claude to the arrival of the personal computer in 1981, when Microsoft's software first reached consumers, and to the commercialisation of the internet in 1995, when Windows 95 and the Netscape browser brought the web to a mass audience.
Both of those moments, Jones said, triggered productivity booms that lasted between four and five and a half years before the cycle peaked. He estimated the current AI rally is roughly 50% to 60% through that arc, implying another year or two of upside before the market reaches a top.
Jones cautioned that the final phase of such a cycle typically produces the largest gains and the greatest danger. The greatest price appreciation in any bull market, he said, comes in the twelve months preceding the top, meaning investors who sit out risk missing the strongest returns, while those who stay in must be prepared to exit quickly.
He compared the current period to late 1999, roughly a year before the dot-com bubble burst in early 2000, and said the eventual drawdown could be significant if the S&P 500 continues to rise. With the market already at repeated record highs, he said, the ratio of stock market capitalisation to GDP could reach 300% to 350%, a level that would make any correction painful.
Jones said he approaches AI through macro baskets of related stocks rather than single-company bets, a strategy consistent with his long-standing preference for diversified thematic positions.
He also struck a cautionary note on the technology itself, saying he has grown worried about the possibility of AI becoming dangerous to humanity if governments fail to regulate it. Polling conducted by Just Capital, he said, shows the American public believes companies should spend roughly 5% of their total AI budgets on safety, roughly twenty times the current average of a quarter of one per cent.
The recap
- Paul Tudor Jones says AI bull market has another year or two.
- He said he bought more AI-related stocks, without naming them.
- Jones warned governments will likely need to regulate artificial intelligence.