Buffett’s Berkshire Hathaway surpasses $1 billion in market value

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(Bloomberg) –Berkshire Hathaway Inc. became the first US company outside the technology sector to surpass $1 trillion in market value.

Shares of Warren Buffett’s conglomerate rose as much as 0.8 percent on Wednesday to push its market capitalization past the $1 trillion mark for the first time. Stocks have risen this year on strong insurance results and economic optimism. The Omaha, Nebraska-based company joins a small group to surpass the milestone, dominated by tech giants such as Alphabet Inc., Meta Platforms Inc. and Nvidia Corp.

“Berkshire did it in a slower but surer 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 being the largest holding. “It’s harder to make money the old fashioned way.”

Berkshire’s rally this year has outpaced the S&P 500’s gains, with the company having one of its best annual starts in a decade. It gained 30% in 2024, while the benchmark market rose 18%. The company isn’t that far behind the so-called Magnificent Seven: a gauge of the biggest tech stocks is up 35% this year.

Buffett spent most of his life transforming Berkshire Hathaway from a struggling textile manufacturer into a booming business empire. He shaped the company alongside longtime business partner Charlie Mungerwho died in November aged 99.

Berkshire’s market cap increased by about 20% a year from 1965 to last year — nearly double the annual return of the S&P 500 over that period. That made Buffett one of the richest men in the world and perhaps the most prolific investor ever.

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The conglomerate’s strength comes as optimism for the economy grows, 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.

This year alone, the stock has added more than $200 billion in market capitalization — a record for the firm, but a stark contrast to Nvidia’s nearly $2 trillion rise. Berkshire’s rally pushed it into overbought territory, based on the relative strength index, and prompted some reluctance from analysts.

The fundamental outlook for Berkshire’s core businesses isn’t necessarily much brighter going forward, according to Bloomberg Intelligence analyst Matthew Palazola, but the firm boasts an “all-weather” portfolio.

Read more: Berkshire cuts Apple stake by nearly half in Spree sale

Meanwhile, lower interest rates could impact returns on the record cash Berkshire amassed as it pared its stake in Apple Inc. and seeming like it Bank of America Corp.’s holdings. Buffett’s cash pile stood at about $276.9 billion in second-quarter results reported in early August. The sheer size of Apple’s stake has become a concern, Check said, and the move to reduce that exposure was prudent. “It took a lot of that risk off the table,” Check said.