The current situation is reminiscent of the eve of the 1999 internet bubble! Legendary investor: "The AI bull market still has 1 to 2 years left," Walsh says "no chance" for a rate cut.

Legendary hedge fund manager Paul Tudor Jones stated that the AI-driven bull market still has further upside potential, and he himself has recently continued to increase his holdings of AI-related stocks.

On Thursday (May 7), Jones said on CNBC's "Squawk Box" that the current stage of AI development reminds him of the rise of Microsoft software in the 1980s and the early days of Internet commercialization in the 1990s. #AI Boom: The Race from Chips to Capital#

He said: "I think the stage of Claude's development in January this year is roughly equivalent to when Microsoft was just emerging in 1981."

Jones also compared the current AI wave to the period of Internet popularization in 1995. At that time, the release of Windows 95 propelled the rapid expansion of Internet commercialization, bringing about several years of productivity improvements and a bull market.

"Both times marked the beginning of a productivity miracle, which lasted for 4 to 5 and a half years," Jones said. "I think we are only about 50% to 60% through this cycle. If you have to correspond to a historical stage, I believe this rally could last another 1 to 2 years."

AI Drives U.S. Stocks to New Highs, Tech Giants Become the Main Line

In recent years, one of the key drivers of the U.S. stock market's continuous rise has been the market's bet that AI will fundamentally change industries and boost productivity.

Large technology companies related to AI infrastructure—including chips, cloud computing, and generative AI developers—have become the core of this market rally. These companies have pushed the S&P 500 Index to a series of new all-time highs.

However, Jones believes that current market sentiment is increasingly resembling the later stage of the Internet bubble in 1999.

He said: "This really does feel a bit like 1999, which is the year before the Internet bubble peaked in 2000."

Jones warned that when this rally eventually ends, the market could experience a sharp correction.

"If the stock market rises another 40%, the market capitalization-to-GDP ratio might reach 300% or even 350%. At that point, you know there is bound to be some kind of suffocating correction," he said.

"I've recently bought more AI stocks"

Despite his wariness about a future bubble risk, Jones revealed that he has recently continued to increase his holdings of AI-related stocks.

However, he did not disclose the specific timing or the stocks purchased.

Jones stated: "I'm a macro trader, so I typically buy a basket of assets. I always like to look for similar moments in history."

"AI Regulation Is Already Too Late"

In addition to market trends, Jones specifically warned about the long-term risks of AI.

He believes that the United States is already clearly lagging behind on AI regulation.

"We should start regulating tomorrow," Jones said. "In reality, it's already too late; we should have done it a long time ago."

He believes that the government should at least require digital watermarking for AI content, to distinguish between real content and deepfakes.

Jones revealed that at a recent AI industry conference, about 80% of AI experts and model developers supported stronger regulation, while this proportion was only 20% last year.

He said: "One leader of an AI company even said he was surprised that the industry had not been regulated until now."

"The Fed Will Not Cut Rates This Year and May Even Consider Raising Rates"

Aside from AI, Jones also discussed the outlook for Federal Reserve policy.

He believes that the incoming Fed Chairman Kevin Warsh will not cut rates easily and may even consider raising rates.

"You ask me if he will cut rates? No chance," Jones said.

He stated that with the current stable job market, the war in Iran, and Trump tariffs pushing up inflation, it would be difficult for the Fed to quickly shift to a dovish stance.

"If it were me, I would even consider raising rates," he said. "Of course, I would watch the data first, but it is definitely something to think about."

Currently, the Fed's benchmark interest rate remains in the range of 3.5%-3.75%. According to CME FedWatch data, traders are now mostly betting that the Fed will keep rates unchanged this year, while the probabilities for rate hikes and rate cuts are relatively close.