As Artificial Intelligence (AI) Stocks Drive the Market Higher, Is Now the Time to Buy? These 9 Words From Warren Buffett Might Change Your Mind.

The S&P 500 is trading at its second-highest CAPE ratio ever -- a reason for some caution.

Buffett has credited a few, smartly executed trades with driving Berkshire Hathaway's gains.

Artificial intelligence (AI) stocks continue to thrive, and they're a major force behind the market's ascent this year. The S&P 500 (SNPINDEX: ^GSPC) is up 7% year to date, and the tech-heavy Nasdaq-100 is up 15%. It's a joyous time to be in the market.

But new investors who think everything AI touches turns to gold might be out of touch with reality. Consider what legendary investor Warren Buffett has said about these kinds of markets and how investors should approach them.

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Warren Buffett made a name for himself as arguably the greatest investor of our time. When he stepped down as CEO of Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) at the end of 2025, the holding company's track record under his tenure vs. the S&P 500 was a 6,099,294% total gain vs. 46,061%.

Buffett and his team didn't succeed by loading up during bull markets , although they often find what to buy in any market. In fact, Buffett has credited just a few trades as being the major drivers behind his success; finding deeply discounted stocks is the value approach to investing .

Deeply discounted doesn't mean cheap or low-priced. A stock is only a bargain if it fulfills Buffett's criteria for an excellent business and trades below its intrinsic value. Very often, when stocks fall to extreme levels, it induces fear among investors, who might sell off even more.