Shares in Warren Buffett's Berkshire Hathaway surged to a historic high last week, marking a significant milestone and positioning the company as a strong contender to become the first non-technology U.S. firm to reach a remarkable $1 trillion market value. The powerhouse based in Omaha experienced a 2% climb 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 the year 2024 alone, Berkshire has witnessed a remarkable increase of over 10%, effectively doubling the return of the S&P 500.
This rapid ascent has propelled Berkshire's market capitalization beyond $863 billion as of the latest market close, securing its position as the seventh most valuable company in the United States. As the owner of BNSF Railway, Geico Insurance, and Dairy Queen, this conglomerate representing traditional sectors could soon join the elite trillion-dollar club, a distinction so far dominated by technology giants. Internationally, only PetroChina and Saudi Aramco currently boast market caps exceeding $1 trillion.
FactSet data indicates that Berkshire's valuation was approximately $777 billion at the close of December and stood at $682 billion at the end of 2022. The journey from $500,000 to $600,000 for Berkshire Class A shares took around two years. Over this period, the 93-year-old investment guru, often referred to as the "Oracle of Omaha," executed significant strategic moves. These included the $11.6 billion acquisition of insurer Alleghany, a substantial stake in Occidental Petroleum amounting to nearly 30%, and a successful turnaround at Geico. Furthermore, Buffett strategically invested billions in Treasury bills to capitalize on rising interest rates and expanded his already lucrative stakes in Japanese trading companies.
With Berkshire now holding a record cash reserve of over $157 billion at the end of September, the upcoming fourth-quarter earnings report, scheduled for later this month, is eagerly anticipated.
As Berkshire claims the seventh position in the market cap hierarchy, discussions have emerged about its potential inclusion in the "Magnificent 7," a group of stocks that led the market surge in 2023. The Mag 7, comprising Microsoft, Alphabet, Amazon, Apple, Meta Platforms, Nvidia, and Tesla, collectively experienced a staggering 75% rally in 2023. While most continued their impressive gains into the new year, Tesla faced a 22% decline in 2024, and Apple retraced about 2%.
Strategas Securities, a prominent Wall Street research firm, has identified Berkshire as one of the top three stocks that could replace Tesla in the Mag 7 group, alongside Broadcom and Eli Lilly. According to Strategas, Berkshire is currently the most suitable candidate to join this influential group based on market cap weighting and earnings contribution to the S&P 500.
Berkshire's original Class A shares bear one of the highest price tags on Wall Street, with each share selling for approximately 45% more than the median price of a U.S. home. Buffett's decision to avoid stock splits is grounded in the belief that the high share price attracts and retains long-term, quality-oriented investors. Despite this, Berkshire introduced Class B shares in 1996 at a price equivalent to one thirtieth of a Class A share, catering to smaller investors seeking a more affordable entry into Buffett's investment prowess. In 2024, Berkshire's Class B shares have witnessed an impressive gain of over 11% and achieved an intraday record of $399.15 earlier in the week.
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