Berkshire trails red-hot S&P 500 by biggest margin so far this year
Berkshire's widely held B shares are now running 16.3 percentage points behind the benchmark index year-to-date, the biggest gap so far in 2026.
AbJimroe
(This is the Warren Buffett Watch newsletter, news and analysis on all things Warren Buffett and Berkshire Hathaway. You can sign up here to receive it every Friday evening in your inbox.)
Berkshire trails red-hot S&P by biggest margin so far this year
With hot tech stocks fueling its solid 5.1% gain in May, the S&P 500 closed Friday at a fresh record high.
In a sharp contrast, shares of Berkshire Hathaway were close to unchanged for the month.
As a result, Berkshire's widely held B shares are now running 16.3 percentage points behind the benchmark index year-to-date, the biggest gap so far in 2026.
At the end of March, Berkshire had a small winning margin of 1.8 percentage points over the S&P.
But then the S&P zoomed more than 35% higher in April and May while Berkshire fell almost 11%.
Great expectations for AI profits, and massive spending to build the infrastructure needed to generate all that future artificial intelligence, have been sending the tech stocks that dominate the market-capitalization-weighted S&P sharply higher.
Berkshire, on the other hand, is extremely conservative with minimal exposure to AI, nearly $400 billion in cash, and solidly profitable, but not spectacular, operating companies.
If enthusiastic AI investments turn out to be a bubble, (the concept has its own Wikipedia page), as some have been warning (for months), that caution may well pay off over time, as it did when Warren Buffett avoided the high-flying internet stocks of the late 1990s.
While its overall AI exposure remains relatively small, it does appear new CEO Greg Abel did, in a decidedly un-Buffett-like move, triple the company's Alphabet stake during the first quarter. At almost $22 billion, it is the fifth largest equity holding in the portfolio.
Berkshire shares are now down 12% since their all-time closing high in May of last year, just before Buffett revealed he planned to step down as CEO at the end of 2025.
According to a chart analysis by 22V Research, as reported by CNBC.com, Berkshire's relative performance ratio vs. the S&P has dropped to its lowest levels since 2007.
In a note to clients, the firm said, "Berkshire Hathaway was a good bellwether for the S&P, but that relationship appears to be changing."
Regulatory delay for railroad merger opposed by Berkshire's BNSF
The U.S. Surface Transportation Board is pausing its review of the proposed $85 billion merger between Union Pacific and Norfolk Southern.
The regulator, which has final say over whether the companies will be able to create the country's first transcontinental freight railroad, wants more information from them by late July on how the tie-up would affect competition.
UNP and NSC already had to file a revised application in April after their first proposal was rejected in January.
Now the STB says, "Several aspects of the revised application... are unclear or underdeveloped and require supplementation at this stage."
A final decision may be delayed until the fall of 2027.
A display for the BNSF Railway at the Berkshire Hathaway Annual Shareholder Meeting in Omaha, Nebraska.
Yun Li | CNBC
Berkshire's BNSF, which has been critical of the merger from the start as anti-competitive, is part of the Stop the Rail Merger Coalition recently formed by rival railroads, customers, and labor unions.
Last August, BNSF announced a "collaboration" with CSX to provide "seamless, efficient, coast-to-coast solutions to ship between the western and eastern U.S."
A few days later, Buffett shot down speculation Berkshire would counter the UNP-NSC deal with a bid to acquire CSX, telling CNBC the company was not in the market to buy any railroad.
BUFFETT & BERKSHIRE AROUND THE INTERNET
HIGHLIGHTS FROM CNBC'S BUFFETT ARCHIVE
'I don't have to bet' on technology companies (1999)
As the dotcom bubble was inflating, Warren Buffett said he would rather invest in traditional companies like Coca-Cola instead of techs like Microsoft because he's "perfectly willing to trade away a big payoff for a certain payoff."
AUDIENCE MEMBER: I know you like to buy into success stories, but you don't like to buy high tech.
And it seems to me, say, in the case of Microsoft, that 10 years from now they'll be doing software development, just like 10 years from now Coke will be selling sugared water.
And what I'm wondering is, why you feel that way when it seems certain companies, high-tech companies, are predictable...
WARREN BUFFETT: I think it's much easier to predict the relative strength that Coke will enjoy in the soft drink world than the strength — the amount of strength — that Microsoft will possess in the software world.
That's not to knock Microsoft at all. If I had to bet on anybody, I'd certainly bet on Microsoft, bet heavily if I had to bet. But I don't have to bet. And I don't see that world as clearly as I see the soft drink world.
Now somebody that has a lot of familiarity with software may very well see it that way and they're entitled to — if it's true they have superior knowledge and they act on it, they're entitled to make money from that superior knowledge. There's nothing wrong with that.
I know I don't have that kind of knowledge, and I simply — and I do think that it's — that if you have a general knowledge of business over decades, that you would regard the industry they're in as less predictable than the soft drink industry.
Now it may also be that even though it's less predictable that there's a whole lot more money to be made, so that if you're right, that the payoff is much larger.
But we are perfectly willing to trade away a big payoff for a certain payoff. And that's the way we're put together.
It does not knock the ability of other people to make those decisions.
I mean, I asked — first time I met Bill Gates in 1991, I said, "If you're going to go away on a desert island for 10 years, you had to put your stock in two companies in the high-tech business, which would they be?"
And he named two very good stocks. And if I'd bought both of them, we'd have made a lot more money than we made, even buying Coca-Cola.
But he also would have said at the same time that if he went away, he'd rather buy Coca-Cola, because he would have felt sure about that happening.
It's — you know, different people understand different businesses. And the important thing is to know which ones you do understand and when you're operating within what I call your "circle of competence."
And the software business is not within my circle of competence, and I don't think it's within in Charlie's.
Charlie?
CHARLIE MUNGER: Well, I certainly agree with that. I think there are interesting questions, too, about how far the whole field can go...
I don't know what happens once you get unlimited bandwidth into the house and way more options, and —
Beyond a certain point, it strikes me that there might be a surfeit of anybody's interest in the field.
I don't know where that point is, whether it's 20 years out or 30 years out, but it would affect me a little.
BERKSHIRE STOCK WATCH
Four weeks
Twelve months
BRK.A stock price: $710,900.00
BRK.B stock price: $474.48
BRK.B P/E (TTM): 14.13
Berkshire market capitalization: $1,022,973,515,650
Berkshire Cash as of March 31: $397.4 billion (Up 6.5% from Dec. 31)
Excluding Rail Cash and Subtracting T-Bills Payable: $380.2 billion (Up 3.0% from Dec. 31)
Berkshire repurchased $234 million of its shares in Q1 2026.
(All figures are as of the date of publication, unless otherwise indicated)
BERKSHIRE'S TOP EQUITY HOLDINGS - May 29, 2026
Berkshire's top holdings of disclosed publicly traded stocks in the U.S. and Japan, by market value, based on the latest closing prices.
Holdings are as of March 31, 2026, as reported in Berkshire Hathaway's 13F filing on May 15, 2026, except for:
Mitsubishi, which is as of April 30, 2026The full list of holdings and current market values is available from CNBC.com's Berkshire Hathaway Portfolio Tracker.
QUESTIONS OR COMMENTS
Please send any questions or comments about the newsletter to me at alex.crippen@nbcuni.com. (Sorry, but we don't forward questions or comments to Buffett himself.)
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Also, Buffett's annual letters to shareholders are highly recommended reading. There are collected here on Berkshire's website.
-- Alex Crippen, Editor, Warren Buffett Watch
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