The Warren Buffett Quote That Has Me Racing to Buy Nvidia Stock

Nvidia just made traditional investors look like they're reading stock tips on cave walls.

Buffett's timeless wisdom—'Be fearful when others are greedy, and greedy when others are fearful'—is flashing buy signals for the chip giant. While Wall Street analysts overcomplicate valuation models with more variables than a quantum algorithm, the Oracle of Omaha's simple mantra cuts through the noise.

Why Nvidia? The company dominates the AI infrastructure race—every large language model, autonomous vehicle, and data center upgrade runs on their hardware. Short-term volatility? Just noise against the computational revolution.

Meanwhile, legacy finance still tries to value tech disruptors using EBITDA metrics designed for railroad companies—a charming but futile exercise. Nvidia isn't just beating expectations; it's rewriting the entire playbook on growth investing.

So while the suits debate price-to-earnings ratios, the rest of us are loading up on the picks and shovels of the AI gold rush. Sometimes the best investment strategy is remembering what worked before everyone started overthinking it.

Buffett likely has great respect for Nvidia's business model

When I think of businesses with great economics, it's hard not to think of(NVDA 1.46%). And while Buffett has largely avoided high-growth tech stocks over the decades due to his well-known preference for investing in companies he understands, he likely has a TON of respect for the company's business model.

Many investors think of Nvidia as a hardware company. Indeed, it's the world's leading designer of GPUs -- critical hardware that makes a host of other technologies like machine learning and artificial intelligence possible. But Nvidia's margins are somehow twice those of competitors such asand. How? Because Nvidia also controls the software side of things through its CUDA developer platform, which is used to program and optimize GPUs for specific tasks.

Source: Getty Images

Because it controls both the software and hardware sides of the equation -- and because the widely used CUDA platform is only compatible with Nvidia's chips -- it's much more difficult for its customers to switch to competing hardware. The friction costs are often simply too high.

This approach may have been put into place by savvy management. But now that Nvidia is in this position, it's hard not to envision the company maintaining its dominant market share and high gross margins for years. It's now a business that, even with weaker management, can still thrive. That's exactly the type of business Buffett recommends buying.