Berkshire’s market value rose about 20% per year between 1965 and last year.
Berkshire Hathaway Inc. became the first U.S. company outside the technology sector to surpass $1 trillion in market value.
Shares of Warren Buffett’s conglomerate rose as much as 0.8% on Wednesday, pushing its market cap above the trillion-dollar mark for the first time. The stock has risen this year on strong underwriting results and economic optimism. The Omaha, Nebraska-based company joins a small group to reach the milestone, dominated by tech giants such as Alphabet Inc., Meta Platforms Inc. and Nvidia Corp.
“Berkshire has done it the slower, but surer way,” said Steve Check, the founder and chief investment officer of Check Capital Management. His company has about $2 billion in assets under management, with Berkshire as the largest holding company. “It’s harder to make money the old-fashioned way.”
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Berkshire’s rally this year has surpassed the S&P 500’s gains, giving the company one of its best annual starts in a decade. By 2024, it is up 30%, while the market benchmark is up 18%. The company is not that far behind the so-called Magnificent Seven: a gauge for the largest technology stocks, it has risen 35% this year.
Buffett has spent most of his life transforming Berkshire Hathaway from a struggling textile manufacturer into a sprawling business empire. He shaped the company together with longtime business partner Charlie Munger, who died in November at the age of 99.
Berkshire’s market value rose about 20% a year from 1965 through last year — nearly double the annual return of the S&P 500 during that time. That has made Buffett one of the richest people in the world, and perhaps the most prolific investor ever.
The conglomerate’s strength comes as optimism about the economy increases, with the Federal Reserve expected to cut rates at its September meeting. Consumer confidence rose to a six-month high in August. Berkshire’s businesses range from truck stop operator Pilot Travel Centers LLC to ice cream chain Dairy Queen and battery brand Duracell.
The stock has added more than $200 billion in market capitalization this year alone — a record for the company, but a stark contrast to Nvidia’s rise of nearly $2 trillion. Berkshire’s rally has pushed the country into overbought territory, based on the relative strength index, and caused some caution among analysts.
According to Bloomberg Intelligence analyst Matthew Palazola, the fundamental outlook for Berkshire’s core businesses isn’t necessarily brighter, but the company does have an all-weather portfolio.
Meanwhile, lower interest rates could impact returns on the record pile Berkshire amassed while selling its stake in Apple Inc. and his assets in the Bank of America Corp. phased out. Buffett’s cash pile was about $276.9 billion in second-quarter results as of early August. The size of Apple’s stock had become a concern, Check said, and the move to reduce that exposure was sensible. “It took a lot of that risk off the table,” Check said.
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