Berkshire Hathaway is experiencing its largest underperformance against the S&P 500 this year, with B shares trailing the index by 16.3 percentage points. While the S&P 500 has surged, fueled by the tech sector’s AI excitement, Berkshire has remained relatively flat. This divergence highlights Berkshire’s conservative approach, significant cash reserves, and limited AI exposure, contrasting sharply with the high-flying tech stocks dominating the market.
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Berkshire trails red-hot S&P by biggest margin so far this year
The S&P 500, propelled by booming tech stocks, achieved a solid 5.1% gain in May and closed the month at a fresh record high. In stark contrast, Berkshire Hathaway's shares remained nearly unchanged for the month. This divergence has resulted in Berkshire's widely held B shares now lagging the benchmark index by 16.3 percentage points year-to-date, marking the largest gap of 2026 so far.
At the end of March, Berkshire held a slight edge over the S&P by 1.8 percentage points. However, the S&P surged over 35% higher in April and May, while Berkshire experienced a decline of nearly 11% during the same period.
The surge in the S&P 500 is largely driven by tech stocks, fueled by immense expectations for AI profits and the substantial investments required to build the necessary infrastructure. This enthusiasm has sent the tech-heavy, market-capitalization-weighted S&P soaring.
Berkshire Hathaway, meanwhile, maintains a conservative stance with minimal exposure to AI and nearly $400 billion in cash. Its operating companies are solidly profitable but not exhibiting spectacular growth.
If the fervent AI investments prove to be a bubble, as some have warned, Berkshire's cautious approach may prove beneficial in the long run, echoing Warren Buffett's strategy of avoiding the dot-com boom of the late 1990s.
Interestingly, under new CEO Greg Abel, Berkshire reportedly tripled its stake in Alphabet during the first quarter. This holding, now valued at almost $22 billion, represents the fifth-largest equity position in the portfolio.
Berkshire shares have declined 12% since reaching their all-time closing high in May of last year, shortly before Buffett announced his planned retirement at the end of 2025. Chart analysis by 22V Research, as reported by CNBC.com, indicates that Berkshire's relative performance ratio against the S&P 500 has fallen to its lowest levels since 2007. The firm noted, "Berkshire Hathaway was a good bellwether for the S&P, but that relationship appears to be changing."
Regulatory delay for railroad merger opposed by Berkshire's BNSF
The U.S. Surface Transportation Board (STB) has paused its review of the proposed $85 billion merger between Union Pacific and Norfolk Southern. The regulator, which holds the final say on the creation of the nation's first transcontinental freight railroad, requires more information from the companies by late July regarding the merger's impact on competition.
Union Pacific and Norfolk Southern had to refile a revised application in April after their initial proposal was rejected in January. The STB stated that "several aspects of the revised application... are unclear or underdeveloped and require supplementation at this stage." A final decision may be delayed until the fall of 2027.
Berkshire's BNSF has been vocal in its opposition to the merger, arguing it is anti-competitive. BNSF is part of the Stop the Rail Merger Coalition, recently formed by rival railroads, customers, and labor unions. Last August, BNSF announced a collaboration with CSX to offer seamless coast-to-coast shipping solutions. However, Buffett quickly dismissed speculation that Berkshire would counter the Union Pacific-Norfolk Southern deal with a bid for CSX, stating the company was not looking to acquire any railroad.
BUFFETT & BERKSHIRE AROUND THE INTERNET
- Wall Street Journal on MSN: He's Berkshire Hathaway's other Charlie, the heir to its insurance juggernaut
- Reuters: Berkshire-owned Jazwares must face trademark lawsuit over Squishmallows 'Hug Mees'
- Bloomberg: Warren Buffett's Shareholder Letters Make a Surprisingly Great Book
- TheStreet: Berkshire Hathaway's latest stock purge sends a clear message
- Snopes: Did Warren Buffett warn of Trump declaring martial law and 'canceling' democracy? Here's the truth [No]
- Fortune on MSN: Warren Buffett says 'you're giving up your potential' if you don't have this one skill—and it has nothing to do with the stock market
HIGHLIGHTS FROM CNBC'S BUFFETT ARCHIVE
'I don't have to bet' on technology companies (1999)
During the dot-com bubble, Warren Buffett stated his preference for investing in traditional companies like Coca-Cola over tech firms such as Microsoft, explaining, "I'm perfectly willing to trade away a big payoff for a certain payoff." He elaborated that it's easier to predict Coca-Cola's enduring strength in the soft drink market than Microsoft's future dominance in software. While acknowledging Microsoft's potential and betting on its success if necessary, Buffett emphasized his decision to invest within his "circle of competence," which he does not believe includes the software industry.
"I don't have to bet" on technology companies (1999)
Charlie Munger concurred, expressing uncertainty about the long-term trajectory of the tech field beyond a certain point.
BERKSHIRE STOCK WATCH
Four weeks
Twelve months
BRK.A stock price: $710,900.00
BRK.B stock price: $474.48
BRK.B P/E (TTM): 14.13
Berkshire market capitalization: $1,022,973,515,650
Berkshire Cash as of March 31: $397.4 billion (Up 6.5% from Dec. 31)
Excluding Rail Cash and Subtracting T-Bills Payable: $380.2 billion (Up 3.0% from Dec. 31)
Berkshire repurchased $234 million of its shares in Q1 2026.
BERKSHIRE'S TOP EQUITY HOLDINGS - May 29, 2026
Berkshire's top disclosed publicly traded stock holdings in the U.S. and Japan, by market value, as of March 31, 2026 (unless otherwise noted), based on its 13F filing on May 15, 2026. Mitsubishi holdings are as of April 30, 2026. The full list is available on CNBC.com's Berkshire Hathaway Portfolio Tracker.
QUESTIONS OR COMMENTS
Please send any questions or comments about the newsletter to Alex Crippen at alex.crippen@nbcuni.com. Warren Buffett's annual letters to shareholders are available on Berkshire's website.
