Investors have flocked to artificial intelligence (AI) stocks this year, and as a result these technology players have led gains in the S&P 500, helping the index climb more than 21%. Why such an interest in AI? Because it has the potential to transform many industries, making companies more efficient and profitable — and even resulting in major discoveries like life-saving new medicines or high-performance autonomous vehicles.

Today's AI market already is worth more than $200 billion, and analysts predict this will expand to more than $1 trillion by the end of the decade. Companies that are developing AI tools or using AI to improve their businesses should be the first to benefit, and they will share the win with investors.

Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free ?

This hasn't escaped the attention of billionaire investors, who have been heavily investing in AI companies. But they aren't buying all AI players right now, and at this stage of the story, are making key decisions about which companies have the most to gain in the months ahead. Billionaire Paul Tudor Jones of Tudor Investment is the perfect example. He recently sold his entire Palantir Technologies (NYSE: PLTR) stake and piled into an AI player that completed a stock split this year — and has a huge catalyst on the horizon. Let's find out more.

Paul Tudor Jones' multimillion-dollar win

First, a quick note on why investors closely watch Jones' investing moves. Not only has he built a fortune since the founding of his firm back in 1980, but this top investor made headlines when he shorted the market ahead of Black Monday in 1987 — this bet against stocks generated a $100 million profit.

In more recent times, the top investor has spoken about the great potential of AI. The technology will drive a productivity boom that should push stocks higher for years to come, Jones said last year in a CNBC interview. So, it's no surprise that Jones is investing in many top names involved in AI, from Microsoft to Amazon.

And in the second quarter, Jones sold all of his shares in one of the year's best-performing AI stocks, Palantir, and added to a position of another AI giant. This player's stock rose so much over the past five years — 2,700% — that it completed a stock split back in June, lowering the per share price to make it more accessible to a broader range of investors. I'm talking about AI giant Nvidia (NASDAQ: NVDA).

Jones sold 126,594 shares of Palantir and increased his position in Nvidia by 853% to 273,294 shares. We don't know the exact reason behind the investor's decision, but it's true that as Palantir stock climbed, valuation exploded higher — reaching levels that look pricey today at 122x forward earnings estimates.