NextFin News - Berkshire Hathaway’s performance has diverged sharply from the broader market as the artificial intelligence boom propels the S&P 500 to record heights. As of the market close on May 29, 2026, Berkshire’s Class B shares are trailing the benchmark index by 16.3 percentage points year-to-date, marking the conglomerate’s widest underperformance gap so far this year. While the S&P 500 surged 5.1% in May alone, fueled by a relentless rally in heavyweight technology stocks, Berkshire’s shares remained virtually flat over the same period.
The performance gap widened dramatically during the second quarter. At the end of March, Berkshire held a modest lead of 1.8 percentage points over the S&P 500. However, the narrative shifted abruptly in April and May as the benchmark index climbed more than 35% while Berkshire’s stock retreated nearly 11%. This divergence highlights the market's current obsession with AI infrastructure and future profit potential—sectors where Berkshire maintains a characteristically cautious footprint.
According to a technical analysis by 22V Research, Berkshire’s relative performance ratio against the S&P 500 has plummeted to levels not seen since 2007. The firm, which specializes in investment strategy and quantitative research, noted to clients that the historical relationship between Berkshire and the broader market is undergoing a fundamental shift. 22V Research typically provides data-driven market insights to institutional investors, and their observation suggests that Berkshire may no longer serve as the reliable market bellwether it once was.
This shift in status is not universally accepted as a permanent decline in the conglomerate's relevance. The current underperformance mirrors the late 1990s dot-com era, when Warren Buffett famously avoided high-flying internet stocks, leading to significant short-term lagging before the eventual market correction vindicated his patience. Today, Berkshire sits on a cash pile approaching $400 billion, a defensive posture that reflects a lack of attractive, large-scale acquisition targets in an expensive market.
Despite the overarching caution, there are signs of tactical evolution under the leadership of Greg Abel, who is set to officially take the helm as CEO at the end of 2025. Berkshire tripled its stake in Alphabet during the first quarter of 2026, bringing its position to nearly $22 billion. While this represents a significant commitment to a tech giant, it remains a fraction of the company’s total equity portfolio, which continues to be dominated by traditional sectors like insurance, energy, and consumer goods.
The conglomerate also faces headwinds in its industrial operations. The U.S. Surface Transportation Board recently paused its review of an $85 billion merger between Union Pacific and Norfolk Southern, a deal that Berkshire’s BNSF Railway has aggressively opposed on anti-competitive grounds. A final decision on that merger may not arrive until the fall of 2027, prolonging a period of regulatory uncertainty for the freight rail industry. For now, Berkshire’s shares remain 12% below their all-time high reached in May 2025, as investors prioritize the immediate growth of the AI sector over the steady, capital-intensive stability of the Buffett model.
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