Warren Buffett’s decade-old acquisition of Precision Castparts, once marred by an $11 billion write-down, is now projected to be worth as much as $100 billion. This dramatic turnaround is fueled by soaring demand for its complex metal components in the aerospace and AI data center industries. Despite this surge in value, Berkshire Hathaway’s stock performance has lagged, prompting calls for clearer investor communication.
In a testament to Warren Buffett's long-term investment philosophy, Berkshire Hathaway's $37.2 billion acquisition of Precision Castparts in 2016 is finally yielding significant returns, despite an initial $11 billion write-down six years ago. At the time of the acquisition, Buffett famously admitted paying a "very high multiple" and later acknowledged being "simply too optimistic" about the company's profit potential in his 2020 shareholder letter, citing the aerospace industry's downturn exacerbated by the COVID-19 pandemic.
However, Buffett's confidence in Precision Castparts CEO Mark Donegan and the company's long-term prospects appears to have been well-placed. Recent market dynamics have dramatically shifted the landscape for the complex metal components manufacturer. Precision Castparts, which produces essential components for jet engine turbine blades, is now experiencing a surge in demand due to a global shortage of these critical parts. Furthermore, its products are also vital for natural gas turbines, which are increasingly in demand to power the energy-intensive artificial intelligence data centers.
This resurgence in demand is highlighted by GE Aerospace's recent announcement to acquire Consolidated Precision Products, a competitor, for nearly $12 billion. Barron's, analyzing this deal, noted that Precision Castparts, using the same valuation multiple (26 times projected 2027 EBITDA), could now be worth around $100 billion. This valuation represents a significant increase from previous estimates and is nearly three times the original purchase price, underscoring Buffett's successful, albeit delayed, investment.
Despite the burgeoning value of Precision Castparts, Barron's points out that Berkshire Hathaway's stock price may not be fully reflecting this subsidiary's growth, partly due to the company's traditional lack of analyst calls and investor events. This situation has led to a recommendation for Berkshire to adopt a more proactive communication strategy to attract new investors.
In other Berkshire Hathaway news, the company's shares saw a modest gain this week, outperforming the broader market averages which experienced declines. This comes as Berkshire's Class A and Class B shares have slightly trailed the S&P 500 year-to-date, despite this week's positive movement.
Separately, a political ad in Nebraska featuring an image of Warren Buffett was removed after his daughter, Susie Buffett, objected to its use without his permission. The campaign for candidate Brinker Harding stated they were respectful of the family's concerns and accelerated the rollout of a new ad that does not feature Buffett.
Additionally, Berkshire Hathaway's Q2 2026 filings show a substantial cash position of $365.5 billion, though slightly down from the previous quarter. The company also repurchased $4.5 billion of its shares during Q2 2026.
