Berkshire Hathaway stock issues dire recession warning

The stock of Berkshire Hathaway (NYSE: BRK.A, BRK.B) has historically been a strong performer and, in the last 20 years, outperformed the S&P 500 benchmark index by approximately 200%.

Simultaneously, the equity of the legendary investor Warren Buffett has, on multiple occasions, served as a major recession indicator considering its historical tendency to underperform relative to the market ahead of crises. 

In 2026, BRK.B is yet again lagging behind, much like during the COVID-19 pandemic and, perhaps more importantly, to a similar extent as during the lead-up to the Great Recession of 2008, per the data Barchart shared on X on May 25.

Why Berkshire is underperforming the S&P 500 similarly to the lead-up to the Great Recession

Examining the most recent 13-F filing of Berkshire’s holdings – the document covering the first quarter (Q1) of 2026 –  it is relatively easy to see why the equity is down 2.11% year-to-date (YTD) while the S&P500 is up 8.97% within the same timeframe.

Specifically, big tech with a particular concentration in the so-called ‘Magnificent 7’ – Nvidia (NASDAQ: NVDA), Apple (NASDAQ: AAPL), Google (NASDAQ: GOOGL), Microsoft (NASDAQ: MSFT), Tesla (NASDAQ: TSLA), Meta Platforms (NASDAQ: META), and Amazon (NASDAQ: AMZN) – has been the primary driver of growth in recent years.

Warren Buffett’s firm has only a limited exposure to these firms. Indeed, Berkshire’s portfolio owns AAPL shares as its biggest holding, and GOOGL – even after the most recent buying – as a far smaller share, and has, by the end of Q1, avoided investing in most of the other companies from the basket.

It also cleared its Amazon stock position between Q5, 2025, and the latest reporting period.

Why Warren Buffett’s cash pile is a recession indicator

Furthermore, one critical reason why Berkshire’s decision to increase the cash pile serves as a popular recession indicator comes down to his strategy: the billionaire is very selective about investing, and he has repeatedly said in recent years that he is seeing few stocks worth buying.

Therefore, while not a deliberate attempt to divest from the market ahead of a crash, the Berkshire Hathaway news coming out in recent years lends credence to the notion that most company shares are severely overvalued and, thus, exceedingly prone to a correction.

Considering the prevailing 2026 narrative about the artificial intelligence (AI) boom and the scale the only company to see outright profits from the boom – Nvidia – has grown to, even a 5% to 10% correction would lead to a wipeout between roughly $550 billion and $1.1 trillion from a single firm.

On the flip side, it is also worth remembering that Warren Buffett has, historically, not been a keen technology investor, seeing the space as outside his competence. 

Therefore, the investment decisions Berkshire Hathaway made in recent years can also be attributable to a degree of industry-aversion disconnected from fundamentals. Further insights might become available later in 2026 with the release of the Q2 filing, given Buffett’s January 1 retirement from his role as the CEO.

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