A flood of equity issuance is reminding Paul Tudor Jones of the dot-com bubble

Paul Tudor Jones has again warned about rough sledding ahead for the market.

U.S. stocks could face a serious test in 2027 as a tsunami of new equity issuance threatens to upend the artificial-intelligence-driven bull market, according to hedge-fund billionaire Paul Tudor Jones.

"2027 is going to be really, really challenging for the stock market," said Jones, the founder of Tudor Investment Corp. "You've probably got the most negative flow picture for the U.S. stock market that we've had since 2002."

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

SpaceX's (SPCX) blockbuster IPO, SK Hynix's (SKHY) U.S. offering and an expected listing from Anthropic are helping to drive record equity issuance in 2026. According to a recent report from Goldman Sachs, U.S. companies have already raised $431 billion via public offerings, follow-ons, converts and special-purpose acquisition companies, or SPACs. The bank expects the final total could hit $675 billion, surpassing the previous peak resulting from the 2021 market mania inspired by the COVID-19 pandemic.

Jones - best known for predicting and profiting from the October 1987 Black Monday stock-market crash - said the troubling trend reminded him of the final years of the dot-com boom, when a welter of unprofitable companies made their public debuts. Many have blamed this flood of supply for soaking up liquidity and siphoning capital away from existing publicly traded companies.

"All of this issuance, all of these IPOs in 1998 and 1998 - really, 2000, 2001 and 2002 - those were the easiest years to be short because you kept having these unlocks that kept adding supply to the market," Jones said.

Investors have been tracking the unlock schedule for SpaceX shareholders who had invested in the company ahead of the IPO. Some insiders are obligated to hold their shares for a minimum term before they have the option of selling. And Jones believes that, due to all of the uncertainty caused by rapidly advancing artificial-intelligence capabilities, many of these insiders will want to quickly diversify.

"I think you'll see a lot of that stock being sold," he said.

Jones, who is known as a commodity trader, said he expects that oil prices could rise by another $20 or $25 a barrel as the Iran conflict drags on.

Over the past couple of years, Jones has repeatedly warned that the AI trade might end badly in a "blow-off top" followed by a crash, similar to what investors experienced during the dot-com peak.

But Jones doesn't believe the peak has arrived just yet. The fourth quarter has a reputation for being a strong period for stocks, and he doesn't expect this year to disappoint.

"Are we going to get the fourth-quarter run for the roses?" he said. "After the midterms, maybe Anthropic comes, will we get the craziness that we typically see in December and January?"

-Joseph Adinolfi