Ace investor Warren Buffet’s conglomerate Berkshire Hathaway Inc. became the first US company outside of the tech sector to surpass $1 trillion in market value on Wednesday, August 28. Shares rose as much as 0.8 per cent to push the company’s market capitalization above the trillion-dollar mark for the first time.
Berkshire’s rally this year has outpaced the S&P 500’s gains, with the company off to one of its best annual starts in a decade. The stock has rallied 30 per cent in 2024 on strong insurance results and economic optimism, while the market benchmark is up 18 per cent.
The Omaha, Nebraska-based conglomerate joins the group of companies to crack the milestone, dominated by technology giants like Alphabet Inc., Meta Platforms Inc., and Nvidia Corp. Berkshire is not far behind the so-called ‘Magnificent Seven’, which is a gauge of the biggest tech stocks—up 35 per cent this year.
Buffett has spent the bulk of his life turning Berkshire Hathaway from a struggling textile maker 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 climbed by roughly 20% a year from 1965 through last year — nearly double the S&P 500’s annual return in that time. That’s turned Buffett into one of the richest people in the world, and perhaps the most prolific investor ever.
The conglomerate’s strength comes as optimism for the economy builds, 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 span 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 sharp contrast to Nvidia’s nearly $2 trillion increase. Berkshire’s rally has pushed it into overbought territory, based on the relative strength index, and prompted a bit of reticence from analysts.
Meanwhile, lower interest rates could impact returns on the record cash pile Berkshire amassed while slashing its Apple Inc. stake and paring its Bank of America Corp. holdings. Buffett’s cash heap stood at about $276.9 billion in second-quarter results reported in early August.