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Berkshire Hathaway has underperformed the S&P lately. Warren Buffett’s impending retirement is a concern for some.
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With Mag Seven exposure on the S&P, questions remain about whether Berkshire Hathaway stock can keep pace with the S&P in the age of AI.
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Buffett’s successors have AI in their sights, but they are also in no rush to pay admission, especially as valuation concerns mount.
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As we move into the peak of tech earnings season, which has been good, but perhaps not good enough to help some of the Magnificent Seven companies’ stocks rise, questions persist about the next big move for the heated and perhaps slightly overbought S&P 500. As the big bull market in technology appears to continue, some investors in Berkshire Hathaway (NYSE:BRK-B) Stocks might be starting to worry that the legendary conglomerate doesn’t have enough AI firepower to participate in what appears to be a largely AI-driven market rally.
Although the AI ​​revolution will eventually lead to broader economic gains at some point in the medium term, at least in my view, it’s hard to say whether Berkshire Hathaway has what it takes to continue outperforming the S&P 500 as it has in past decades, especially since the S&P is arguably a more AI-heavy index than it was before ChatGPT, more than a year after pandemic lockdowns were lifted.
No doubt, I’m sure many Berkshire shareholders will have a whole list of questions at Berkshire Hathaway’s upcoming annual shareholder meeting, one that won’t have Warren Buffett sitting at the front of the stage to answer questions.
With just two months left in Buffett’s reign as CEO of the trillion-dollar titan, all attention will turn to the Oracle of Omaha’s successors. And you can be sure that volatility could take things up a few notches as long-time shareholders become perhaps a little more critical of people like the new incoming CEO, Greg Abel, and the other hand-picked successors who will eventually get to be in the driver’s seat (if they weren’t already).
Of course, a big question for Greg Abel, Ajit Jain, as well as star stock pickers Ted Weschler and Todd Combs, is how their public stock investing strategy will differ and evolve in a post-Buffett era. While I’m sure the team will stay true to many of Buffett’s value investing principles, I certainly wouldn’t be surprised if they liked the tech sector more, even though valuations aren’t as attractive today as they were before the AI ​​boom began almost three years ago.