Berkshire Hathaway Inc. became the first U.S. company, outside of the technology sector, to surpass a market value of $1 trillion.
Shares of Warren Buffett’s conglomerate rose 0.8% on Wednesday, pushing its market capitalization above the trillion-dollar mark for the first time. The stock has surged this year on strong insurance results and economic optimism. The Omaha, Nebraska-based company joins a small group to hit the milestone, dominated by technology giants such as Alphabet Inc., Meta Platforms Inc. and Nvidia Corp.
“Berkshire has done it the slower, but more sure way,” said Steve Check, founder and chief investment officer of Check Capital Management. His firm has about $2 billion in assets under management, with Berkshire its biggest holding. “It’s harder to make money the old-fashioned way.”
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Berkshire’s rally this year has outpaced the S&P 500’s gain, with the company off to its best annual start in a decade. It’s projected to gain 30% through 2024, while the market benchmark is up 18%. The company isn’t far behind the so-called Magnificent Seven: A gauge of the biggest tech stocks is up 35% this year.
Buffett has spent much of his life transforming Berkshire Hathaway from a struggling textile manufacturer into a sprawling business empire. He shaped the company alongside longtime business partner Charlie Munger, who died in November at age 99.
Berkshire’s market value has risen about 20% each year from 1965 through last year — roughly double the annual return of the S&P 500 over that time. That’s made Buffett one of the richest people in the world, and perhaps the most successful investor of all time.
The group’s strength comes as optimism builds for the economy, with the Federal Reserve expected to cut interest 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 firm, but a stark contrast to Nvidia’s nearly $2 trillion rise. Berkshire’s rally has pushed it into overbought territory, based on the Relative Strength Index, and prompted a bit of silence from analysts.
The future fundamental outlook for Berkshire’s core businesses isn’t as bright, but the company has an “all-weather” portfolio, according to Bloomberg Intelligence analyst Matthew Palazzola.
Meanwhile, low interest rates could hurt the returns on the record cash pile Berkshire has amassed while it has cut its stake in Apple Inc. and reduced its stake in Bank of America Corp. Buffett’s cash pile was about $276.9 billion in second-quarter results reported in early August. Check said the size of the stake in Apple had become a concern, and the move to reduce that exposure was prudent. “It takes away a lot of the risk,” Check said.
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