Berkshire Hathaway Inc. has made history by becoming the first U.S. company outside the tech sector to surpass a $1 trillion market value. Shares of Warren Buffett’s conglomerate rose by as much as 0.8% on Wednesday, pushing its market capitalization above the trillion-dollar mark for the first time. This achievement comes as the stock has surged this year, buoyed by strong insurance results and growing economic optimism. The Omaha, Nebraska-based company now joins an elite group of companies that have reached this milestone, a list largely dominated by tech giants like Alphabet Inc., Meta Platforms Inc., and Nvidia Corp.
“Berkshire has done it the slower, but more sure, way,” remarked Steve Check, founder and chief investment officer of Check Capital Management, which manages about $2 billion in assets, with Berkshire as its largest holding. “It’s harder to make money the old-fashioned way.”
Berkshire’s rally in 2024 has outpaced the S&P 500’s gains, marking one of its best annual starts in a decade. The company has seen a 30% increase in its stock price this year, compared to an 18% rise in the S&P 500. This performance places Berkshire just behind the so-called Magnificent Seven, a group of the largest tech stocks, which have collectively gained 35% this year.
Warren Buffett has spent much of his life transforming Berkshire Hathaway from a struggling textile manufacturer into a vast business empire. He shaped the company alongside his longtime business partner, Charlie Munger, who passed away in November at age 99. Under Buffett’s leadership, Berkshire’s market value grew by roughly 20% annually from 1965 through last year, nearly doubling the S&P 500’s annual return over the same period. This remarkable growth has made Buffett one of the richest people in the world and arguably the most successful investor of all time.
Berkshire’s strength comes as optimism for the economy grows, with the Federal Reserve expected to cut interest rates at its September meeting. Consumer confidence reached a six-month high in August. Berkshire’s diverse portfolio includes businesses ranging from truck stop operator Pilot Travel Centers LLC to ice cream chain Dairy Queen and battery brand Duracell.
This year alone, Berkshire has added more than $200 billion in market capitalization, a record for the firm. However, this increase pales in comparison to Nvidia’s nearly $2 trillion surge. Despite Berkshire’s rally pushing it into overbought territory based on the relative strength index, some analysts remain cautious.
According to Bloomberg Intelligence analyst Matthew Palazola, the fundamental outlook for Berkshire’s core businesses isn’t necessarily much brighter in the near term, but the company benefits from an “all-weather” portfolio. Meanwhile, lower interest rates could impact returns on the record cash pile Berkshire has accumulated, which stood at about $276.9 billion in second-quarter results reported in early August. The decision to reduce its Apple Inc. stake and pare down its Bank of America Corp. holdings was seen as a prudent move, with Steve Check noting that it has mitigated some risk. “It’s taken a lot of that risk off the table,” Check said.
