Billionaire investor Paul Tudor Jones is best known for correctly calling the 1987 market crash, making an estimated $100 million in the process. The legendary investor has publicly struck a cautious tone about the market, and during the second quarter, he was making moves around his top AI holdings, including Nvidia (NVDA -0.97%), Micron Technology (MU -0.78%), Microsoft (MSFT +0.43%), and Taiwan Semiconductor Manufacturing (TSM +0.71%).
Jones tends to use a combination of holding common shares along with call and put options. Let’s look at how he was repositioning his top AI holdings in the second quarter.
Nvidia
Today’s Change
(-0.97%) $-2.10
Current Price
$214.75
Key Data Points
Market Cap
Day’s Range
$214.50 – $218.74
52wk Range
$164.07 – $236.54
Volume
97.5M
Avg Vol
142.3M
Gross Margin
74.15%
Dividend Yield
0.13%
Nvidia is Jones’ third-largest stock position and the one AI stock it appears he made the most bullish moves around, significantly increasing his common stock holdings, while only slightly adding to his put position. However, he did significantly reduce his call position.
The combination of Nvidia’s valuation (the stock trades at a forward price-to-earnings (P/E) of just 17 based on analyst estimates for its fiscal 2028, ending January 2028) and growth (revenue grew 85% in the first quarter) makes it an attractive stock at current levels. As the AI chip leader, Nvidia still has a huge opportunity in front of it, and its acquisition of Groq positions it well for the booming inference market. However, its future clearly revolves around overall AI infrastructure spending, which Jones is clearly hedging against.
Micron Technology
Today’s Change
(-0.78%) $-7.55
Current Price
$966.78
Key Data Points
Market Cap
Day’s Range
$958.26 – $989.96
52wk Range
$114.25 – $1255.00
Volume
20.8M
Avg Vol
48.5M
Gross Margin
72.60%
Dividend Yield
0.05%
Jones’ most bearish moves around his top AI holdings were with memory maker Micron, as he slashed his call positions and lowered his common stock exposure while upping his put position.
Micron has been riding the memory supercycle, which has led to surging revenue and ballooning gross margins. While the cycle looks like it could last several more years and the stock is cheap with a forward P/E under 7, this is historically an industry that has seen boom times lead to eventual collapses.
While industry supply-demand dynamics suggest this time will be different, as memory makers struggle to keep up with growing demand as they deal with their own constraints, Jones’ heavily hedged position does make sense.
Taiwan Semiconductor Manufacturing
Taiwan Semiconductor Manufacturing
Today’s Change
(0.71%) $2.95
Current Price
$418.95
Key Data Points
Market Cap
Day’s Range
$416.70 – $425.68
52wk Range
$225.63 – $479.00
Volume
7.9M
Avg Vol
13.5M
Gross Margin
63.08%
Dividend Yield
0.84%
Taiwan Semiconductor is Jones’ largest stock position. He increased his number of common shares by 340% in the quarter, while more than doubling his put position. He also added slightly to his call position.
TSMC is arguably one of the companies best positioned for the AI infrastructure boom. The company has a virtual monopoly on advanced logic chip manufacturing, making it a vital partner for chip designers. It’s benefiting from increased chip demand, while also seeing strong pricing power. Best of all, it doesn’t matter which AI chip company prevails, as most rely on it for their chip manufacturing.
That said, TSMC is also the AI company with the most to lose. If AI infrastructure spending drops and it’s left with a lot of underutilized fabs, that would spell disaster for its margins. As such, Jones’ heavily hedged position makes sense.
Image source: Getty Images.
Microsoft
Of his top four AI holdings, Microsoft appears to be the one Jones is overall most bullish about, with his common stock and call holdings larger than his put position. During Q2, he significantly raised his common stock and put positions by pretty similar amounts, while drastically cutting his call position.
Microsoft stock had gotten pretty beaten up in Q2, as investors feared that AI could disintermediate its core software business. They were also cautious about its cloud computing unit’s heavy ties to OpenAI. However, with its fiscal fourth-quarter earnings report in July, Microsoft continued to prove that AI is a growth driver for its core enterprise software business, while its Azure cloud business continues to boom.
Given how entrenched Microsoft is in the enterprise space, the company looks like it will be an AI winner, not a loser. Meanwhile, it has a huge cloud backlog that will help drive growth in this segment for many years to come.
