Millions of Americans own Nvidia (NVDA) stock indirectly through retirement accounts and index funds, which means that a lot more than the fortunes of individual tech investors is riding on the AI boom.
Nvidia’s rise has been the biggest catalyst for the broader market, but a warning issued by Warren Buffett, now the chairman emeritus of Berkshire Hathaway, in 1999 offers a timely reminder that transformative technology doesn’t automatically make every leading company a great investment at any price.
Buffett’s concern during the dot-com era was not whether technology would change society. It was whether investors could identify which companies would preserve a “truly durable competitive advantage”.
Buffett’s warning is especially relevant now because Nvidia has already delivered exceptional results. Since ChatGPT’s launch in late 2022, the company’s annual revenue has grown from roughly $27 billion to more than $215 billion, according to Seeking Alpha data, while its market value has expanded from about $420 billion to roughly $5.5 trillion.
For Nvidia shareholders today, the unresolved question is: how much of the company’s current AI economics can endure as competition and customer alternatives grow.
Buffett’s warning was about picking winners, not doubting technology
Buffett’s message from his 1999 shareholder letter was more nuanced than a simple warning against technology stocks.
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He and longtime Berkshire Vice Chairman Charlie Munger fully accepted that new technologies could reshape the economy, writing that “our society will be transformed by their products and services.” The harder problem was deciding which companies would still command exceptional economics years later.
Interestingly, Buffett said Berkshire could not confidently identify which technology businesses possessed a “truly durable competitive advantage,” because rapidly changing industries made long-term competitive positions unusually difficult to predict.
When other investors believed they could make those calls, Buffett wrote that Berkshire would “neither envy nor emulate them.”
His concern was therefore not whether technological progress was real, but whether investors were confusing a powerful trend with certainty about the eventual winners.
Rising share prices could make that mistake even easier, particularly when, as Buffett put it, investors had “substituted hope for rationality.”
Nvidia has already answered one part of that old debate.
AI can produce enormous profits for individual companies. What remains unresolved is the part Buffett cared about most, which is whether Nvidia’s current advantages can remain durable enough to justify expectations embedded in its stock for years to come.
Nvidia has already proved the AI boom can produce real profits
Nvidia is different from other companies caught up in past tech booms in that its rise has been backed by a tremendous expansion in actual business performance.
As I mentioned earlier, around ChatGPT’s November 2022 launch, Nvidia was worth nearly $422 billion and had annual revenue of just under $27 billion, including about $15 billion from data centers.
By fiscal 2026, revenue had surged to $215.9 billion, roughly eight times fiscal 2023 levels. The acceleration has continued: Nvidia generated $96.2 billion in its latest quarter alone, with data centers contributing $89 billion.
In other words, one quarter of data center revenue now represents almost six times what that business produced in the full fiscal year around ChatGPT’s debut.
The stock has reflected that transformation.
Nvidia’s market value has expanded to roughly $5.5 trillion, up about 13-fold from late 2022, while shares remain near record highs. Moreover, Morgan Stanley recently restored Nvidia as its top semiconductor pick and maintained a $300 price target as reported by Seeking Alpha.
The deeper reason for that dominance goes beyond GPUs.
Nvidia’s CUDA software ecosystem, built over nearly two decades and used by millions of developers, makes its hardware deeply embedded in how AI systems are built and deployed. That among other things gives Nvidia perhaps the strongest current case for the kind of durable competitive advantage Buffett said was so difficult to identify in fast-changing technology markets.
Buffett’s old warning now sits at the center of the AI trade
Nvidia’s rise has shown that the AI boom can create extraordinary sales, profits and shareholder wealth.
Interestingly, Buffett’s stance on technology also evolved when he believed the economics were durable enough.
Berkshire Hathaway (BRK.A) began scooping up shares of Google parent Alphabet (GOOGL) in the third quarter of 2025, a move Buffett later said was his idea after years of acknowledging that Berkshire had missed Google’s rise.
The initial stake was worth about $4.3 billion, and by June 2026 Berkshire had increased its Alphabet holding by 83%, and its stake had grown to be worth roughly $37.8 billion as reported by Reuters, making it the conglomerate’s third-largest stock position.
Additionally, Buffett’s 1999 lesson was never that a transformative technology should be ignored but was more about the fact that investors still need to separate a powerful technological shift from the harder question of which companies can preserve superior economics over time.
That question now matters beyond Nvidia. AI-related companies have become a major force inside the S&P 500, hyperscalers are preparing to spend about $800 billion this year and $1.1 trillion next year, and Bain estimates the industry may need more than $4.2 trillion in new revenue over five years to support the infrastructure being built.
Nvidia currently has strong evidence on its side.
Explosive sales growth, a dominant AI platform and an entrenched CUDA ecosystem. And its roughly $5.5 trillion valuation certainly assumes that a meaningful portion of those advantages can survive growing competition, changing chip economics and customer efforts to build alternatives.
That does not make Nvidia a repeat of the dot-com bubble. It makes Buffett’s framework more relevant.
The real question is no longer whether AI will change the world. It is whether Nvidia can remain one of the companies that captures the economics after that change is complete.
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