Berkshire Hathaway Surpasses $1 Trillion Market Value

The market value of Berkshire Hathaway (NYSE: BRK.A, BRK.B) surpassed $1 trillion on Wednesday, underscoring investor confidence in the company, which has been built over nearly six decades into a symbol of the American economy.

Berkshire now joins six other major U.S. companies, primarily in or tied to the technology sector, with market values exceeding $1 trillion. These companies are notable players in the global economy.

During Wednesday's trading, Berkshire’s class A shares rose as much as 1.2%, nearing the $700,000 mark. The more accessible class B shares trade at a fraction of this value.

Berkshire Hathaway, headquartered in Omaha, Nebraska, has been under the leadership of its current CEO since 1965. Under this leadership, it has transformed from a struggling textile business into a massive entity encompassing a diverse range of businesses. These include car insurance, railroads, energy, running shoes, ice cream, kitchen knives, and a print publisher of encyclopedias.

The company's operating businesses generated $22.8 billion in profit during the first half of the year, a 26% increase from 2023.

In addition to its operating businesses, Berkshire also maintains a significant stock portfolio, even after selling tens of billions of dollars of shares in major companies during 2024. These sales have contributed to the company's cash reserves, which primarily consist of U.S. treasury bills, soaring to $276.9 billion as of June 30.

Berkshire’s growth has been characterized by a systematic, relatively low-risk approach. As a large conglomerate, it benefits from the strength of various sectors within its portfolio.

The $1 trillion valuation is based on the company’s outstanding class A and class B shares. Stock repurchases have slowed this year, contributing to the current valuation.

Since the CEO took over, Berkshire Hathaway’s shares have gained more than 5,600,000%, averaging an annual return of around 20%, nearly double the annualized gain of the Standard & Poor’s 500, including dividends.

As of Tuesday, the company’s shares had risen 27% this year, outpacing the S&P 500's 18% increase, excluding dividends.

While Berkshire Hathaway remains a strong investment, some investors caution against jumping in solely based on the recent market capitalization milestone. The stock is considered fully priced and may be most suitable for those with a long-term investment horizon, particularly a 10-year outlook.