Berkshire outperforms S&P 500 as AI fears hit tech stocks

Berkshire Hathaway shares rose more than 5% this week as the S&P 500 index fell 2.7%. The move reversed a one-month trend where Berkshire underperformed the benchmark by 13.6 percentage points. Berkshire is now ahead of the S&P 500 by 5.8 points for the year. Investors shifted funds from slumping technology stocks to the conglomerate, which has low exposure to artificial intelligence.

The Nasdaq Composite fell 3.4% for the week. Thursday's heavy selling pushed the index 10% below its recent high. This decline marks a correction. Berkshire shares hit record highs three times this week. The stock is up 6% from the record set the Friday before Warren Buffett announced his CEO departure in May 2025. Two weeks ago, the price erased the 15% drop seen after that announcement.

Greg Abel, Berkshire's CEO, sees an opportunity in AI for the company's energy division. In September, he said Berkshire Hathaway Energy could provide power to data centers. He also defended the company's bet on Alphabet, calling it a significant player in AI. Berkshire bought nearly 106 million Alphabet shares as of June 30. The position was valued at $37.8 billion at the time. It included $10 billion in shares bought directly from the company in June.

Alphabet shares have since dropped about 20% to around $284. The stake is now worth $30.2 billion. It fell from the third largest holding to fourth, behind Coca-Cola. Bloomberg analysts question the timing of the AI push. Cathy Seifert of CFRA Research asked if it is too late to increase exposure. Meyer Shields of Keefe Bruyette & Woods views the bet as a long-term wager consistent with Berkshire's conservatism.

Andrew Bary of Barron's estimates a $3 billion loss on the Alphabet stake. He calls Berkshire's stock picking disappointing for the decade. The S&P 500 has returned 150% since late 2019. Tech stocks have quadrupled. Bary cites Verizon, HP, and General Motors as mediocre or losing investments. He notes Apple remains the largest holding at $78 billion. Berkshire sold 75% of its Apple stake since 2023 at an average price of $200. The stock now trades at $342.

Berkshire added $27 million to its Sirius XM position. This move helped push Sirius XM shares to a 52-week high. The stock gained 8.4% on Wednesday after the disclosure. It closed at $32.40 on Friday. The addition follows a 14% rise in Sirius XM's third-quarter free cash flow. The company also raised its 2026 financial guidance.

Pacific Power, a Berkshire unit, asked California regulators for a 57% rate increase. The hike would add $120 to typical residential electric bills. A 14% decrease will take effect in January to offset part of the cost. The utility faces $637 million in liability claims from 2020 and 2022 fires. Oregon's Supreme Court heard arguments this week on a jury verdict that could expose PacifiCorp to tens of billions in damages.