Warren Buffett’s Berkshire Hathaway Is the Next Trillion-Dollar Stock


trillion dollar - Warren Buffett’s Berkshire Hathaway Is the Next Trillion-Dollar Stock

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With all the hoopla about the top tech stocks that have market valuations above $1 trillion, it’s easy to overlook the fact that the next company to cross the 1 and 12 zeroes milestone is likely to be one that is decidedly NOT a Magnificent 7 Nasdaq darling.

Warren Buffett’s Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) is now valued at more than $860 billion, a record high. So, the Oracle of Omaha’s conglomerate only needs to climb about 16% from current levels to top $1 trillion.

Berkshire, the parent company of Geico, Dairy Queen, the Burlington Northern Santa Fe railroad, and numerous other insurers, consumer companies and industrial firms, has performed well thanks in particular to a boom in its insurance business. The company’s operating earnings rose nearly 20% in the first nine months of 2023, to just under $29 billion. The solid results are certainly one reason why Berkshire’s stock (trading just under $400 for one of the B shares and at nearly $600,000 for one of the A shares that never split) is up about 10% this year and nearly 30% over the past 12 months,

But many investors own Berkshire… and follow Buffett’s every word… because of the company’s investing prowess. Buffett, along with lieutenants Ted Weschler and Todd Combs, runs a massive portfolio that owns shares of many notable blue chips. Apple (NASDAQ:AAPL) is by far the largest position in the Berkshire mix, accounting for nearly half of the portfolio’s assets. So even though the famously tech-shy Buffett likes to portray himself as a bit of a folksy Luddite, Berkshire has profited from the success of the iPhone, Apple’s many subscription services and potentially the new Vision Pro headset.

In other words, Apple’s rise to a nearly $3 trillion market cap is one of the factors behind Berkshire’s push toward $1 trillion. But it’s not the only member of the Magnificent 7 that Buffett owns. Berkshire also has a small stake in Amazon (NASDAQ:AMZN). And for all the talk about how Berkshire avoids tech, it even has a tiny position in cloud software firm Snowflake (NYSE:SNOW).

Buffett Takes Berkshire to $1 Trillion in Classic Style

Make no mistake though. Berkshire isn’t turning into the next Ark Invest. Buffett is no Cathie Wood. The rest of the portfolio is dominated by classic consumer plays such as Buffett’s beloved Coca-Cola (NYSE:KO) and Kraft Heinz (NASDAQ:KHC), oil giants Chevron (NYSE:CVX) and Occidental Petroleum (NYSE:OXY) and big financial firms Bank of America (NYSE:BAC) and American Express (NYSE:AXP).

Berkshire’s AmEx stake, which makes up more than 8.5% of the portfolio, is another key factor behind Berkshire’s success. AmEx shares are trading near a record high, as wealthy consumers continue to spend with their credit and debit cards. In addition, Berkshire owns smaller stakes in Visa (NYSE:V) and Mastercard (NYSE:MA), which are also trading near all-time highs, as well as a small position in Capital One (NYSE:COF).

What else is in Buffett’s wallet? We’ll find out on Feb. 14 when the company is required to disclose its portfolio holdings for the fourth quarter. Consider it a Valentine’s Day present from Buffett to you.

As of this writing, Paul R. La Monica did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Paul R. La Monica is a veteran financial journalist with nearly 30 years experience (including more than 20 at CNN) covering the stock market and other asset classes, the economy and other corporate and business news.

Article printed from InvestorPlace Media, https://investorplace.com/2024/02/warren-buffetts-berkshire-hathaway-is-the-next-trillion-dollar-stock/.

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