Berkshire Hathaway (BRK.B) Stock: First Quarter Earnings Rise 18% Under New Leadership

Key Highlights

• Operating earnings reached $11.35 billion in Q1, reflecting an 18% increase compared to the same period last year
• Cash reserves climbed to an unprecedented $397.38 billion amid ongoing challenges in identifying attractive acquisition opportunities
• Greg Abel, who assumed the CEO role from Warren Buffett in January, emphasized a disciplined approach to capital allocation
• Insurance operations generated $4.4 billion in profit, marking a 4% gain; BNSF railway earnings surged 13% to $1.38 billion
• Morningstar continues to assign a fair value of $765,000 for Class A shares, awarding the stock a four-star rating

Berkshire Hathaway delivered first-quarter operating earnings of $11.35 billion on Saturday, representing an 18% increase from the $9.64 billion reported in the comparable period of 2024. This marked the inaugural earnings announcement under Greg Abel’s stewardship, following his succession of Warren Buffett at the beginning of 2026.

Berkshire Hathaway Inc., BRK-B

The performance aligned with forecasts from Greggory Warren, an analyst at Morningstar. The research firm retained its fair value assessment of $765,000 for Class A shares (equivalent to $510 for Class B shares) and upheld its four-star rating, characterizing the stock as moderately undervalued.

Berkshire’s stock has declined approximately 6% year-to-date, lagging behind broader market indices.

The conglomerate’s cash holdings expanded to an all-time high of $397.38 billion, continuing an upward trend from previous quarters, reflecting the ongoing difficulty in identifying acquisitions that satisfy the company’s stringent valuation criteria. During the first quarter, Berkshire repurchased $234 million worth of its own shares—marking the first buyback activity since May 2024—though no additional repurchases occurred during the initial two weeks of April.

Adjusted operating revenue increased 4.4% year-over-year to $93.7 billion. Book value per share advanced 11.1% compared to the prior year, reaching $505,723.

At Saturday’s annual shareholder meeting, Abel directly addressed investor concerns regarding the deployment of the company’s massive cash position.

Insurance and Railway Operations Drive Performance

Insurance operating earnings increased 4% to reach $4.4 billion. This represents an improvement over last year’s results, which were negatively impacted by Southern California wildfire claims affecting reinsurance operations. However, Geico’s pre-tax underwriting profit fell 35%, attributed to elevated accident claims and increased marketing expenditures.

BNSF railway operations delivered an impressive quarter, with earnings jumping 13% to $1.38 billion. Growth was fueled by robust demand across grain, petroleum fuels, oilseeds and meals transportation. Morningstar observed that BNSF continues to trail Union Pacific in operational efficiency, with an operating ratio differential of approximately 425 basis points.

Berkshire Hathaway Energy registered a modest 2% increase, benefiting from robust natural gas pipeline revenues driven by cold weather-related demand. Wildfire litigation exposure and potential legislative challenges to renewable energy investments remain areas of concern for this segment moving forward.

The manufacturing, service and retail portfolio posted a 5% earnings gain to $3.2 billion, partially supported by the OxyChem acquisition, though profit margins experienced pressure from escalating operational costs.

Abel Addresses AI Strategy and Organizational Efficiency

Regarding artificial intelligence adoption, Abel revealed that select Berkshire operations—including BNSF—have begun implementing AI technologies to address specific operational challenges. He emphasized the company would not pursue AI initiatives indiscriminately.

Morningstar’s Greggory Warren observed that Berkshire’s insurance pricing environment has stabilized following several particularly strong years, though first-quarter underwriting performance remained robust with no significant catastrophe losses recorded during the period.

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