Billionaire Paul Tudor Jones warns AI and IPOs could hit stocks hard in 2027. Protect your nest egg now

Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below.

Wall Street's appetite for artificial intelligence has helped fuel a stock market boom. But billionaire investor Paul Tudor Jones is worried about what happens when the bill comes due.

"2027 is going to be really, really challenging for the stock market," the Tudor Investment Corp. founder told CNBC's "Squawk Box" on Oct. 13 (1).

Jeff Bezos backs a platform that lets anyone invest in rental homes for as little as $100 — 6 ways to build wealth like a landlord without actually being one

A single line on your car insurance policy could be inflating your premium by up to 30% — here's what to change

Gold has overtaken U.S. Treasuries as central banks' top reserve asset. Get Goldco's 2026 Precious Metals IRA Playbook for free

His concern comes down to supply and demand. As companies raise money to fund the AI buildout and big names go public, more shares will compete for investors' dollars.

Jones expects that shift to make life harder for shareholders — and he plans to bet on falling prices.

"I'll be short the whole year," he said.

If you've benefited from rising stocks, it might be worth asking how much of your nest egg depends on the boom continuing.

For years, corporate buybacks and acquisitions have helped take shares off the market. Apple (NASDAQ: AAPL) alone repurchased 402 million shares for $89.3 billion in fiscal 2025 (2).

Acquisitions can also remove an entire company's stock from public trading. When Microsoft (NASDAQ: MSFT) bought Activision Blizzard in 2023, it cancelled shareholders' stock in exchange for $95 per share in cash (3).

Jones tracks those forces against the stock coming onto the market through IPOs, additional offerings and the expiration of selling restrictions. He believes that balance is becoming less favorable for investors.

SpaceX's enormous valuation and the anticipated offerings from Anthropic and OpenAI are changing the calculation, he said. More companies seeking investor money could make it harder to sustain high stock prices.

An IPO also isn't necessarily the end of the selling. Employees, founders and early backers often face lockup periods that temporarily prevent them from unloading their shares.

Once those restrictions expire, more stock becomes available to trade. Those shareholders won't necessarily sell immediately, but buyers may eventually need to absorb substantial blocks of stock.

That creates a potential share overhang (4): The prospect of selling that could weigh on prices if demand doesn't keep pace.