Microsoft or Micron: Billionaire Paul Tudor Jones Is Loading Up on One Top AI Stock

Is AI a good thing or a bad thing? That is a question currently occupying everyone from policymakers and business leaders to students and everyday users.

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The reality is far from black and white. AI has the potential to unlock meaningful gains in productivity, innovation, and improve the quality of life in ways that once felt out of reach. At the same time, it brings a new set of challenges, from job displacement and misinformation to deeper concerns around oversight and control.

That tension hasn’t gone unnoticed by Paul Tudor Jones. The billionaire investor sees AI as a multi-layered shift, one that will touch nearly every part of our lives in different ways.

“AI can be such a force for good,” said Jones, who has a net worth of $8.1 billion. “And we’re going to see it immediately in both health and education very quickly. It’s going to be fantastic. That’s the good news. The neutral news is that these models are increasing in their efficiency and performance by between, on the very low end, 25%, and on the high end, 500% every 3 or 4 quarters. So it’s not even curvilinear. It’s a vertical lift in how powerful artificial intelligence is becoming. And then thirdly, and the one that disturbed me the most, is that AI clearly poses an imminent threat, a security threat, in our lifetimes to humanity.”

Of course, Jones, the founder and CIO of Tudor Investment, which has assets under management of ~$17 billion, has not only been busy pontificating about AI’s impact, but has naturally also been busy picking up AI stocks to pad his portfolio – among them AI leaders Microsoft (NASDAQ:MSFT) and Micron (NASDAQ:MU).

But recently, he has been making some big changes, reshuffling his positions across both. So, let’s take a closer look at the pair to see which of these AI leaders he is leaning into and the one he is stepping away from.

Microsoft

First up, Microsoft, an appropriate place to begin if we’re talking about AI. The company has positioned itself at the center of the AI ecosystem through its deep partnership with ChatGPT maker OpenAI and the integration of the game-changing tech across its core products. From embedding Copilots into Microsoft 365 to scaling AI capabilities through Azure, Microsoft is effectively monetizing AI at both the application layer (where users pay for tools like Copilot in Microsoft 365) and the infrastructure layer, where it earns revenue from companies using its cloud platform, Azure, to build and run their own AI systems.

But while Microsoft was considered an early winner as AI hit the mainstream, investors have somewhat soured on the tech giant over the past year. The problem, apart from growing competition, is that the company has been ramping up spending to build out AI capacity, particularly within Azure, but the revenue payoff is taking longer to fully materialize. That has raised concerns about near-term margins and returns, even if the long-term opportunity remains intact.

The clashing trends were easy to see in the recent December-quarter report. On the one hand, both revenue and earnings beat expectations. However, capital expenditures have surged as Microsoft has been pouring money into data centers, GPUs, and AI infrastructure. Its data center spending rose 66% year-over-year, taking total capex to $37.5 billion, while cloud growth came in below expectations.

Still, Jones must expect the investment to pay off eventually. In Q4, his firm bought 351,901 MSFT shares, increasing its stake by 96%. These holdings are worth over $129.5 million.

Morgan Stanley analyst Keith Weiss is also a fan, and highlights why Microsoft is positioned well for the future.

“While Microsoft has seen strong momentum across the entire platform (not just GenAI) and continues to aggressively integrate AI across its product portfolio, Microsoft 365 Copilot and E5 upgrades (driven by security) remain the key drivers of average revenue per user (ARPU) growth, with the new Agent 365 another potential growth lever going forward,” the 5-star analyst said. “These drivers align well with our latest CIO survey results on multiple fronts: 1) Upticking O365 Spending Intentions; 2) Clear Mix-Shift Towards Higher O365 Subscriptions; 3) Increasing CIO Intentions to Leverage Microsoft’s Generative AI products; and 4) Improving M365 Copilot Penetration Levels.”

Quantifying his stance, Weiss rates MSFT stock as Overweight (i.e., Buy), while his $650 price target offers 12-month upside of 77%. (To watch Weiss’s track record, click here)

32 other analysts join Weiss in the bull camp, heavily outnumbering 3 Holds, and all adding up to a Strong Buy consensus rating. Going by the $583.68 average price target, a year from now, shares will be changing hands for a ~59% premium. (See MSFT stock forecast)

Micron

AI is reshaping the memory market in a way few cycles ever have, and that shift is putting Micron front and center. The semiconductor company specializes in computer memory, a space long defined by sharp swings in revenue and profits tied to demand for PCs, servers, and smartphones. This time, however, the surge looks different, as AI workloads are driving an intense need for high-capacity, high-speed memory, pushing demand to levels the industry hasn’t seen in years.

That demand centers on DRAM and HBM for processing, along with NAND for large-scale storage. Orders have moved well beyond typical levels, with Micron already indicating its HBM supply is sold out through 2026. At the same time, tight supply has driven memory prices higher, creating a strong tailwind for the company, as reflected in its latest quarterly results.

In its fiscal second quarter (February quarter), Micron delivered blowout – and record – results. Revenue reached $23.86 billion, up 196.4% year-over-year and coming in $4.56 billion above the forecast. Adjusted EPS hit $12.20, up 682% vs. the year-ago period, and exceeded the prognosticators’ estimate by $3.54.

Looking ahead, the Q3 outlook was even stronger. Micron expects revenue between $32.75 billion and $34.25 billion and adj. EPS between $18.75 and $19.55 – both some distance above Street expectations of $23.66 billion in revenue and $11.29 in adj. EPS.

It’s fair to wonder, then, if Jones regrets his recent Micron move. During Q4, he sold his entire MU position, offloading 321,613 shares. That said, it’s worth noting that since reporting earnings last week, Micron shares have been beating a hasty retreat. Even after the 19.5% pullback, however, the stock remains up 315% over the past year, so Jones likely walked away with a solid profit.

In any case, his actions will probably make sense to Summit Insights analyst Kinngai Chan, who does not expect gains of the same order this year.

“We expect the stock outperformance to moderate into 2H26. While we still see favorable memory demand-supply dynamics and pricing through 1H26, we believe price increases will likely decelerate meaningfully as we move into 2H26,” the 5-star analyst said. “Despite robust demand from AI servers, we expect the current demand-supply imbalance to ease into 2H26 and 2027 as we expect the PC and smartphone TAM to contract further, caused by the high memory prices. Additionally, we expect Samsung to enter Nvidia’s HBM supply chain to be a negative catalyst for the stock.”

Accordingly, Chan rates Micron shares as Hold (i.e., Neutral), with no fixed price target in mind. (To watch Chan’s track record, click here)

That said, only 1 other analyst joins Chan on the fence, and with an additional 26 Buys, the stock claims a Strong Buy consensus rating. At $536.55, the average target points toward one-year gains of 47%. (See Micron stock forecast)

Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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