Warren Buffett’s Berkshire Hathaway reached a $1 trillion market value on Wednesday. Buffett Berkshire market cap is reflecting investor confidence in the conglomerate that Warren Buffett built over nearly six decades into what many consider a proxy for the American economy. Berkshire Hathaway hitting trillion dollar making it the first nontechnology company in the U.S. to score the coveted milestone.
Buffett’s company joined six other U.S. companies, all in or tied to the technology sector, valued at more than $1 trillion: Apple, Nvidia, Microsoft, Google parent Alphabet, Amazon.com, and Facebook parent Meta Platforms.
Berkshire Hathaway’s colossal rise
Buffett, who turns 94 on Friday, has run Omaha, Nebraska-based Berkshire since 1965.
He transformed it from a failing textile company into a colossus with dozens of old-economy businesses such as Geico car insurance, the BNSF railroad, Berkshire Hathaway Energy, Brooks running shoes, Dairy Queen ice cream, Ginsu knives and the World Book encyclopedia.
Berkshire Hathaway hits trillion dollar market value
The $1 trillion threshold was crossed just two days before the “Oracle of Omaha” turns 94 years old. The shares were up 0.8% to $696,502.02 on Wednesday, allowing it to top the $1 trillion mark, per FactSet.
The operating businesses generated $22.8 billion of profit in the year’s first half, up 26% from 2023.
Berkshire also has a huge stock portfolio even after selling tens of billions of dollars of Apple and Bank of America, its largest and until recently its second-largest stock holdings, in 2024.
The sales are a major reason Berkshire’s cash hoard, mainly in U.S. Treasury bills, soared to $276.9 billion as of June 30. Berkshire has also slowed repurchases of its own stock.
Berkshire hitting a milestone
The milestone “is a testament to the firm’s financial strength and franchise value,” said Cathy Seifert, Berkshire analyst at CFRA Research. “This is significant at a time when Berkshire represents one of the few remaining conglomerates in existence today.”
“Buffett built Berkshire in a systematic, relatively low risk manner,” said Steve Check, president of Check Capital Management in Costa Mesa, California, which invests one-third of its $2 billion of assets in Berkshire stock and options.
“As a huge conglomerate it will always have parts doing well.”
Base of Berkshire’s $1 trillion value
The $1 trillion valuation is based on Berkshire’s 553,234 Class A and 1,325,192,508 Class B shares outstanding as of July 23.
Since the year Buffett took charge, Berkshire shares have gained more than 5,600,000%.
That’s about 20% annually, nearly double the annualized gain in the Standard & Poor’s 500 (.SPX), opens new tab including dividends.
No single catalyst appeared to fuel Wednesday’s gain. Berkshire’s Class A shares are up 28% this year, while the S&P 500 excluding dividends is up 17%.
Buffett still owns more than 14% of Berkshire despite having donated more than half his shares to charity since 2006.
His $146 billion fortune makes him the world’s sixth-richest person, Forbes magazine said on Wednesday.
“Investors should certainly not jump in because the market cap hit $1 trillion, and the stock is perhaps as fully priced as it has been since before the 2008 financial crisis,” he said. “It is a good investment for someone with a 10-year horizon.”
Warren Buffett on selling spreee
Buffett has been in a defensive mode as of late, dumping a massive amount of stock, including half of his Apple stake, while raising Berkshire’s cash pile to a record $277 billion at the end of June.
Strong earnings result
After Berkshire’s latest strong Q2 earnings, UBS analyst Brian Meredith sees Berkshire’s market value rising far above $1 trillion, raising his 12-month price target to $759,000 for the A shares, almost 9% higher than Wednesday’s level.
“We continue to believe BRK’s shares are an attractive play in an uncertain macro environment,” he wrote in the note earlier this month.
Berkshire share price highest
Berkshire’s Class A shares from the price point is the highest on Wall Street. That’s because Buffett has never split the stock, contending that the high share price attracts and retains more long-term, quality-oriented investors.
Berkshire Hathaway stock update
Shares of the Omaha, Nebraska-based conglomerate have rallied more than 28% in 2024, far above the S&P 500′s 18% gain. Berkshire’s Class A shares closed up 0.8% at a price of $696,502.02 on Wednesday. The more widely held Class B shares rose 0.9% to a price of $464.59.
Despite the milestone, Buffett and other analysts caution against jumping into the stock solely because of its market cap, emphasizing that Berkshire remains a strong investment for those with a long-term horizon.
