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Berkshire Hathaway has been underperforming the S&P of late. Warren Buffett’s looming retirement is a concern for some.
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With the Mag Seven exposure in the S&P, questions linger as to whether Berkshire Hathaway stock can keep up with the S&P in the AI age.
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Buffett’s successors have AI on their crosshairs, but they’re also in no rush to pay up for admission, especially as valuation concerns mount.
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As we move through the peak of tech earnings season, which has been good, but perhaps not good enough to help some of the shares of the Magnificent Seven firms move higher, questions linger as to the next big move for the heated and perhaps mildly overbought S&P 500. As the great bull market in tech looks to continue on, some investors in Berkshire Hathaway (NYSE:BRK-B) stock might be starting to grow concerned that the legendary conglomerate doesn’t quite have enough AI firepower to participate in what seems to be a mostly AI-driven market rally.
Though the AI revolution will eventually lead to broader economic gains at some point over the medium term, at least in my opinion, it’s tough to tell if Berkshire Hathaway has what it takes to keep outperforming the S&P 500 as it has in decades past, especially since the S&P is arguably more of an AI-heavy index than it was before ChatGPT more than a year after the pandemic lockdowns lifted.
Undoubtedly, I’m sure many Berkshire shareholders will have a full list of questions come the next Berkshire Hathaway annual meeting of shareholders, one that won’t have Warren Buffett sitting at the front of the stage to take questions.
With just two months left in Buffett’s reign as CEO of the $1 trillion titan, all focus will shift on the Oracle of Omaha’s successors. And you can be sure that the volatility could take things up a few notches as long-time shareholders grow perhaps a bit more critical of the likes of incoming new CEO Greg Abel and the other hand-picked successors that will finally get to be in the driver’s seat (if they weren’t already).
Of course, one big question for Greg Abel, Ajit Jain, as well as star stock pickers Ted Weschler and Todd Combs, is how their public stock investing strategy will differ and evolve in a post-Buffett era. While I’m sure the team will stay true to many of Buffett’s value investment principles, I certainly wouldn’t be surprised if they were to take on more of a liking to the tech sector, even though valuations aren’t as attractive today as they were before the AI boom kicked off nearly three years ago.
