- Paul Tudor Jones sees a massive opportunity for the stock market thanks to large language models like ChatGPT.
- Jones told CNBC on Monday that artificial intelligence will help unlock a productivity boom in the economy.
- Prior “productivity miracles” have generated average annual stock market gains of 15%, Jones said.
Bank of America says AI could have a $15.7 trillion impact on the global economy by 2030 — and enrich investors in these 13 industries along the way
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The introduction of large language artificial intelligence models like ChatGPT will have a massive impact on the economy and stock market, according to billionaire investor Paul Tudor Jones.
Jones told CNBC in a Monday interview that the massive adoption of ChatGPT has changed his outlook completely on inflation and the stock market within the past six months. That’s because a “productivity boom” could be unleashed on the economy that helps drive inflation lower and the stock market higher.
“I do think the introduction of large language models [and] artificial intelligence, is going to create a productivity boom that we’ve only seen a few times in the last 75 years,” Jones said.
Previous productivity booms in the economy occurred in the late 1950’s after the US invested in its infrastructure, in the 1980’s following the introduction of the PC, and in the 1990’s following the introduction of the internet.
“Each of those three episodes were associated with productivity gains of somewhere between one and three percent. Let’s say that this large language model is going to give us a productivity boom of 1.5% over the next 5 years per year, which I think is possible,” Jones said.
Part of Jones conviction in large language models like ChatGPT is the fact that its experienced the fastest adoption rate in history. The popular chatbot developed by OpenAI reached 100 million active users just two months after its launch.
And if Jones is correct that the economy realizes massive efficiencies thanks to artificial intelligence, then the stock market could be set to boom in turn.
“I just go back and look historically what that’s done during those productivity miracles, you’ve had the stock market on average appreciate 15% per year, you’ve had inflation come down, and you’ve had a PE expansion of somewhere between 1.5 and 2,” Jones said.
A decline in inflation would be a big win for the Federal Reserve and would allow policymakers to lower interest rates from their current target of just over 5%, creating another potential tailwind for the stock market.
But not all stocks will benefit from the onset of AI, according to Jones, hinting that there will be many winners and losers as a result of the disruption. One loser could be Apple, according to Ark Invest’s Cathie Wood.
“We have a long term productivity boom that’s going to come from LLMs that within the stock market there will be war. Within the stock market there are going to be huge winners and huge losers,” Jones said, adding that overall “that makes me think the tide is coming in for the stock market.”