Berkshire Hathaway shares gained more than 5% this week while the S&P 500 fell almost 2.7%. Investors moved away from slumping tech stocks amid fears about AI spending. Berkshire's Alphabet stake lost value in the slide.
Berkshire pulls ahead of the S&P 500
Berkshire Hathaway shares were up more than 5% this week while the S&P 500 fell almost 2.7%. Investors moved money away from tech stocks and into what appears to be the relative safety of a traditional conglomerate with relatively little exposure to artificial intelligence, amid fears that massive spending on data centers won't pay off.
One month ago, Berkshire's B shares were underperforming the S&P by 13.6 percentage points for the year. After three more record-high closes this week, Berkshire is now 5.8 percentage points ahead of the benchmark.
The Nasdaq Composite fell 3.4% on the week. Thursday's heavy tech selling pushed the index down more than 10% below its most recent high, in what is commonly referred to as a correction. The index made up some of its lost ground Friday.
Alphabet stake drops in value
Berkshire is not completely removed from the AI convulsions. As of the end of June, it owned almost 106 million shares of Alphabet.
On June 30, the position had a market value of $37.8 billion. Since then both the Class A and Class C shares have dropped by around 20%, and the stake is now valued at $30.2 billion. That puts it behind Coca-Cola's $38.3 billion in the portfolio's #4 position.
Bloomberg suggests Berkshire's push into AI "may appear ill-timed." Barron's writer Andrew Bary, however, estimates a $3 billion loss on Alphabet and sees it as part of a disappointing long-term trend in Berkshire's stock choices.
Bary also points to Apple. Berkshire has reduced that stake by 75% since 2023 at what he calculates is an average selling price around $200 per share, well below AAPL's current $342.
Sirius XM buy and a California rate request
Berkshire disclosed a relatively small $27 million addition to its $4.1 billion Sirius XM position. That helped fuel an ongoing rally that lifted the stock to a 52-week high this week. Berkshire bought more than 924 thousand shares at an average price of $29.10 over three trading days.
Meanwhile, Pacific Power, a unit of Berkshire Hathaway's PacifiCorp, is asking California regulators for a 57% rate increase. The request would raise the typical residential electric bill by $120 a month.
Source: CNBC
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