Shares in Warren Buffett’s Berkshire Hathaway soared to a historic high last week, achieving a significant milestone and positioning the company as a formidable contender to become the first non-technology U.S. firm to attain a remarkable $1 trillion market value.
The Omaha-based powerhouse witnessed a 2% surge in the past week, reaching an unprecedented peak of $600,531. This surge marked the first time the stock surpassed the $600,000 threshold on an intraday basis.
In 2024 alone, Berkshire has seen a notable increase of over 10%, effectively doubling the return of the S&P 500.
This swift ascent has propelled Berkshire’s market capitalization beyond $863 billion as of the latest market close, solidifying its position as the seventh most valuable company in the United States.
As the proprietor of BNSF Railway, Geico Insurance, and Dairy Queen, this conglomerate representing traditional sectors could soon join the elite trillion-dollar club, a distinction thus far monopolized by technology giants.
Internationally, only PetroChina and Saudi Aramco currently boast market caps exceeding $1 trillion.
According to FactSet data, Berkshire’s valuation reached approximately $777 billion by the end of December and was at $682 billion by the close of 2022.
The journey from $500,000 to $600,000 for Berkshire Class A shares spanned about two years. During this time, the 93-year-old investment guru, often referred to as the “Oracle of Omaha,” made significant strategic moves.
These included the $11.6 billion acquisition of insurer Alleghany, acquiring a substantial stake in Occidental Petroleum amounting to nearly 30%, and orchestrating a successful turnaround at Geico.
Additionally, Buffett strategically invested billions in Treasury bills to take advantage of rising interest rates and expanded his already profitable stakes in Japanese trading companies.
With Berkshire boasting a record cash reserve exceeding $157 billion by the end of September, the eagerly awaited fourth-quarter earnings report, set for later this month, has garnered significant attention.
Ranked seventh in market cap, Berkshire has sparked discussions regarding its potential inclusion in the “Magnificent 7,” a cohort of stocks that spearheaded the market surge in 2023.
Comprising Microsoft, Alphabet, Amazon, Apple, Meta Platforms, Nvidia, and Tesla, the Mag 7 collectively witnessed a remarkable 75% rally in 2023.
Although most continued their impressive momentum into the new year, Tesla experienced a 22% decline in 2024, while Apple retraced approximately 2%.
Strategas Securities, a renowned Wall Street research firm, has pinpointed Berkshire as one of the top three contenders to potentially replace Tesla in the Mag 7 ensemble, alongside Broadcom and Eli Lilly.
Strategas asserts that Berkshire presently stands as the most fitting candidate to join this influential group, citing its market cap weighting and earnings contribution to the S&P 500.
Berkshire’s original Class A shares carry one of the loftiest price tags on Wall Street, with each share commanding approximately 45% more than the median price of a U.S. home.
Buffett’s steadfast decision to eschew stock splits is rooted in the conviction that the high share price serves to allure and retain long-term, quality-focused investors.
However, in 1996, Berkshire introduced Class B shares at a price equivalent to one-thirtieth of a Class A share, catering to smaller investors seeking a more accessible entry point into Buffett’s investment acumen.
In 2024, Berkshire’s Class B shares experienced a remarkable surge of over 11% and achieved an intraday pinnacle of $399.15 earlier in the week.
