AI bull market sees fresh momentum as Paul Tudor Jones eyes Microsoft and Amazon

Billionaire investor Paul Tudor Jones believes the artificial intelligence bull market has significant room to run, potentially sustaining momentum for another year or two. Speaking in an interview with CNBC, the hedge fund manager noted that improved valuations and robust earnings have restored confidence in AI stocks after a period of hesitation. Jones specifically identified Microsoft and Amazon as companies poised to deliver strong returns as the sector regains its footing.

The recent market environment has shifted notably from the uncertainty that plagued AI equities several months ago. Concerns regarding high valuations, broader economic questions, and geopolitical tensions had previously interrupted the rally, causing investors to step back from market movers. However, as valuations have stabilised and financial results have demonstrated strength, the sector has regained its upward trajectory, offering renewed optimism for growth investors.

Jones highlighted Microsoft as a stock capable of soaring due to its unique market position. He argued that the company's deeply integrated systems and internal use of AI within its software suite will protect it from the risk of AI replacing traditional software. Furthermore, the company's Azure cloud business is benefiting directly from the AI boom, with cloud revenue surging by 40 per cent in the recent quarter. The stock currently trades at 24 times forward earnings estimates, presenting what Jones views as a balanced opportunity between a mature earnings machine and future growth potential.

Amazon was also singled out by Jones as a key player in the AI revolution, driven by its Amazon Web Services division and custom chip designs. The cloud computing unit has reached an annual revenue run rate of $150 billion, while the in-house designed chips business has achieved an annual run rate of $20 billion. Demand for these proprietary chips remains high, with certain designs frequently selling out, suggesting the company is well-positioned to deliver significant growth in the coming quarters.

The bullish sentiment is supported by recent institutional activity and strong financial performance. Amazon shares rose by 31.9 per cent in a single month following a fourth-quarter fiscal 2025 report that beat expectations, driven by unusual buy pressure from big money institutions. This surge followed a disclosure of $213.4 billion in revenue and $25 billion in operating income, reinforcing the view that major tech players continue to attract significant capital.

Despite the positive outlook, Jones cautioned that the rally is not guaranteed and warned that a potential decline could be significant when the current movement ends. He noted that while he recently added to his AI positions, he did not disclose the specific assets purchased. The prediction relies on current market sentiment and the assumption that Microsoft's integrated approach will successfully retain customers against the backdrop of a rapidly evolving technological landscape.