Paul Tudor Jones warns U.S. stock valuations at 252% of GDP could trigger a 30% to 35% correction, yet he is buying more AI stocks, betting on productivity gains lasting another two years or longer.

Jones, the investor who predicted the 1987 Black Monday crash, points to U.S. stocks trading at 252% of GDP and warns the market could hit a future peak of 300% to 350% of GDP before it collapses, triggering a 30% to 35% correction that would erase trillions in household wealth.

Despite these warning signs, Jones is buying more stocks—particularly in AI infrastructure (semiconductors, cloud providers), and enterprise software—because he believes AI represents a transformational productivity shift similar to the PC revolution and internet boom, with corporate earnings gains potentially lasting two or more years.

Four major cloud companies—Microsoft, Amazon, Alphabet, and Meta Platforms—have collectively guided towards spending at least $710 billion in capital expenditures this year alone on AI infrastructure, signaling sustained AI investment momentum.