Berkshire Beats the S&P 500 by 19.2 Points as AI Trade Cracks

Berkshire Hathaway just posted its widest monthly beat of the S&P 500 since 2010. The conglomerate outpaced the index by 19.2 percentage points in the month through Thursday, while its Class B shares climbed 13.2% to a record high and the S&P 500 fell 3.7%.

The split runs straight through the AI trade. Nvidia has shed nearly $1.4 trillion in value since its Oct. 6 record, including a 9.26% drop on Nov. 5 alone, as investors question whether data center spending will pay off. Democrats' Nov. 3 midterm wins added fears of tighter scrutiny on new data centers, and Fortune reported much of the fleeing money landed in Berkshire — a company that makes its money from railroads, energy, factories and insurance, not AI chips.

It adds up to the fourth-widest gap in 30 years. The record still stands at 29.6 points, set during the 2008 financial crisis. One research team's take: Berkshire, it wrote, appears strong even without Warren Buffett as CEO. But the lead is already eroding — it narrowed to 16.9 points by Tuesday's close. And these swings cut both ways: in May, Berkshire trailed the S&P 500 by 14.3 points.

Greg Abel, who took over as CEO in January after Buffett later gave up the chairman's seat, has been spending. Berkshire bought back $9.6 billion of its own stock in the third quarter, more than double the prior quarter's total, then added about $2 billion more in October.

The business underneath looks softer. Operating earnings slipped 5.8%, landing at $12.7 billion, according to Insurance Journal. Insurance underwriting profit dropped 43%, dragged down by car insurer GEICO. Bloomberg Intelligence analyst Matthew Palazola offered a read on Abel's buyback appetite: valuations of equities probably looked less attractive in the third quarter. Berkshire is still sitting on $377.4 billion in cash, and a holdings filing due later this month will show what Abel bought and sold.