Despite trailing the S&P 500 by 10 points this year, Berkshire Hathaway's historical performance patterns and strong operating earnings suggest a potential recovery for the conglomerate.
Historical pattern of Berkshire outperforming after years of significant underperformance, combined with earnings growth and large cash reserves, supports a bullish outlook.
Berkshire Hathaway shares have lagged the S&P 500 by 10 percentage points in 2026, a historical anomaly that often precedes a performance snapback. With CEO Greg Abel deploying capital and operating earnings growing 17% in the first half, the company's valuation appears increasingly attractive relative to its massive $365 billion cash reserve.
When Berkshire's share price remains stagnant while operating earnings continue to grow, the stock becomes cheaper relative to its earnings, often setting the stage for a valuation correction in the following year.