Warren Buffett Badly Beaten by the S&P 500

Berkshire Hathaway Inc. (NYSE: BRK-B) stock is up less than 9% this year, while the S&P 500 has seen a gain of just under 15%. The performance of Warren Buffett’s big conglomerate could lose out to the major index based on annual performance of 2025. The greatest investor in history has lost his hot hand for now.

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Investors look at Berkshire Hathaway as something of a safe haven stock. It has a portfolio of stocks and private companies as large as any other conglomerate in the country. While much of this ownership is in financial services, Buffett has a foot in the oil industry and railroads. The company also owns the stock of nearly 50 companies, ranging from American Express and Occidental Petroleum to Coca-Cola, Bank of America, and Kroger. A theory is that this gives Berkshire a broad foundation across virtually the entire economy. Being sturdy is good.

The most convincing argument about Berkshire’s lag is its low exposure to the super-hot tech sector. Buffett says he does not invest in companies he does not understand. The runup in these stocks is largely due to artificial intelligence (AI), and some investors believe that the concentration of new technology is a risk. AI may be the most important technology in history, but it has produced little revenue. Some suspect that it will always be free to users.

Another challenge to Berkshire Hathaway’s valuation is not what it owns but what it has sold. Buffett held shares in Chinese electric vehicle (EV) giant BYD for 17 years and sold the last of them earlier this year. He made 20x his first investment in the company but decided not to stay with the largest EV company in the world. This can be seen as smart because EV sales have slowed. Or it could be Buffett exiting what is the likely future of the auto industry.

He has also sold a great deal of his investment in Apple Inc. (NASDAQ: AAPL). Buffett first bought the stock in 2016. Over time, it became Berkshire’s largest holding. He has been selling shares for several quarters, although it is still a pillar of this portfolio. Apple hit an all-time high last week. Selling might be viewed as a mistake.

Looking across Buffett’s entire portfolio, its weakness this year may be based largely on one decision. The Magnificent 7 mega-tech companies are about 35% of the S&P 500. He has largely eschewed them.

Berkshire Hathaway is the 11th most valuable company in the world, with a market cap of $1.1 trillion. But look at the companies ahead of it that he has largely (but not entirely) avoided: Nvidia, Microsoft, Apple, Meta, Alphabet, Broadcom, and Tesla.

Half of Warren Buffett’s Berkshire Hathaway Is Really in Just Three Dividend Stocks

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