Investors have flocked to artificial intelligence (AI) stocks this year, and as a result, these tech players S&P 500helped the index rise more than 21%. Why is there so much interest in artificial intelligence? Because it has the potential to transform many industries, make companies more efficient and profitable, and even lead to major discoveries such as life-saving new drugs or high-performance autonomous vehicles.

Today’s AI market is already worth over $200 billion, and analysts predict it will grow to over $1 trillion by the end of the decade. Companies that develop AI tools or use AI to improve their business should be the first to benefit and share the profits with investors.

This situation did not escape the attention of billionaire investors who invested heavily in artificial intelligence companies. But they’re not buying all AI players right now, and at this stage of the story they’re making important decisions about which companies will make the most in the coming months. Billionaire Paul Tudor Jones of Tudor Investment is a perfect example. He recently sold all his assets Palantir Technologies (PLTR 0.24%) It piled into an AI player completing a stock split this year, and there’s a big catalyst on the horizon. Let’s learn more.

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Paul Tudor Jones’ multimillion-dollar victory

First, a quick note on why investors are watching Jones’ investment moves closely. Not only has he made a fortune since his firm’s founding in 1980, but this top investor also made headlines when he shorted the market ahead of Black Monday in 1987; This bet against stocks brought a profit of $100 million.

More recently, the top investor talked about the huge potential of artificial intelligence. Jones said in an interview with CNBC last year that technology will create a productivity boom that will push stocks even higher in the coming years. Therefore, it is no surprise that Jones has invested in many top names in the field of artificial intelligence. Microsoft with Amazon.

In the second quarter, Jones sold his entire stake in Palantir, one of the best-performing AI stocks of the year, adding to the position of another AI giant. Shares of this player have risen so much over the past five years (2,700%) that it completed a stock split in June, lowering the price per share to make it more accessible to a wider range of investors. I’m talking about the artificial intelligence giant Nvidia (NVDA -0.72%).

Jones sold 126,594 shares of Palantir, increasing his position in Nvidia by 853% to 273,294 shares. We don’t know the exact reason behind the investor’s decision, but it’s true that as Palantir shares climbed, the valuation rose even further, reaching levels that look expensive at 122x today. forward earnings forecasts.

Valuation problem

While Palantir’s long-term story still looks strong, today’s valuation could limit near-term gains as investors turn to companies trading at more moderate levels. Nvidia has also been on the rise this year, but the stock, trading at 49 times forward earnings estimates, may have room to move, especially with a major catalyst ahead of us.

Nvidia plans to release its new architecture, Blackwell, and the fastest chip ever in the coming weeks. The company says it will increase production in the fourth quarter and even generate billions of dollars in revenue during this period. Demand currently exceeds supply, supporting Nvidia’s revenue forecasts.

Today, Nvidia is the world’s #1 AI chip player, and its broad range of related products and services, as well as its focus on innovation, will keep it at the top well into the future. The company has reported triple-digit revenue growth for several quarters, pushing revenue to record highs of $30 billion in the latest quarter.

Importantly, this growth has been accompanied by extremely strong margins, and Nvidia predicts this will continue. Gross margin last quarter was 75%, and Nvidia predicts margin for the next quarter and full year will be in the mid-70% range.

All this shows that Jones and recently Bought Nvidia shares – As the Blackwell launch progresses and in the long term, we may see the fruits of this in the coming months.