- Berkshire Hathaway’s operating earnings rose 16 per cent to US$12.98 billion, supported by its railroad, energy and manufacturing businesses.
- Greg Abel deployed billions into Alphabet, Berkshire shares and acquisitions, ending a 14-quarter streak as a net seller of stocks.
- Berkshire shares gained more than 3 per cent as investors welcomed early evidence that its new chief executive can put its enormous cash reserves to productive use.
Berkshire Hathaway Inc. (NYSE:BRK.A, NYSE:BRK.B, TSX:BRK) shares climbed to their highest level since May 2025 after chief executive Greg Abel accelerated spending and delivered stronger-than-expected second-quarter results.
Class A shares rose as much as 3.3 per cent Monday to US$806,102.81, while Class B shares gained as much as 3.1 per cent to US$537.74.
This article is a journalistic opinion piece which has been written based on independent research. It is intended to inform investors and should not be taken as a recommendation or financial advice.
The market response suggests investors are becoming more confident in Berkshire’s post-Warren Buffett era. Abel, who succeeded Buffett as chief executive at the beginning of 2026, is beginning to deploy a cash pile that had grown as Berkshire struggled to find sufficiently attractive investments.
Operating earnings rise 16 per cent
Berkshire generated second-quarter revenue of US$101.81 billion, representing growth of 10 per cent following more than two years of largely stagnant sales.
Operating earnings increased 16 per cent to US$12.98 billion from US$11.16 billion one year earlier. This measure excludes gains and losses from Berkshire’s investment portfolio, making it a more useful indication of how its operating businesses performed.
Net income more than doubled to US$25.67 billion. However, that figure included US$12.68 billion of investment gains, primarily reflecting changes in the market value of stocks Berkshire still owns.
Berkshire itself warns that quarterly investment gains can make reported earnings “extremely misleading” because they fluctuate with share prices.
Its underlying businesses produced a mixed but broadly positive quarter.
BNSF Railway’s earnings increased 6 per cent to US$1.56 billion as higher consumer, agricultural and energy volumes offset rising fuel costs. Berkshire Hathaway Energy’s profit climbed 27 per cent to US$891 million, supported by stronger utility margins and tax credits.
Manufacturing, service and retailing earnings rose 24 per cent to US$4.47 billion, with strength from businesses including NetJets and electronic-components distributor TTI.
Insurance was the main weakness. Geico’s pre-tax underwriting profit fell 45 per cent as accident claims and advertising expenses increased. Total insurance-underwriting earnings declined 13 per cent to US$1.73 billion.
Berkshire becomes a net stock buyer
The bigger investor story was how Abel used Berkshire’s capital.
Berkshire purchased US$23.5 billion of publicly traded stocks during the quarter while selling approximately US$3.7 billion. The resulting US$19.8 billion of net purchases ended a 14-quarter streak in which Berkshire sold more equities than it bought.
The largest disclosed investment was a US$10 billion addition to Alphabet Inc. (NASDAQ:GOOGL, TSX:GOOG), the parent company of Google and YouTube. Alphabet is now one of Berkshire’s five largest publicly traded holdings alongside American Express, Apple, Bank of America and Coca-Cola.
The investment is notable because it increases Berkshire’s exposure to technology beyond its long-standing Apple position. It also indicates that Abel sees value in selected technology companies despite elevated valuations across much of the sector.
Berkshire also repurchased approximately US$4.5 billion of its own shares during the quarter and more than US$3.3 billion during July.
Its repurchase policy permits buybacks when Abel, after consulting Buffett, determines that Berkshire shares trade below a conservative estimate of intrinsic value. The purchases therefore provide an implicit signal that management viewed the stock as undervalued.
Cash pile begins to shrink
Berkshire finished June with approximately US$364.7 billion in cash and short-term Treasury bills, down from a record US$380.2 billion three months earlier.
The company also completed its US$6.8 billion acquisition of U.S. homebuilder Taylor Morrison in July, adding another major operating business to its portfolio. That followed the US$9.4 billion purchase of OxyChem in January.
Despite the increased activity, Berkshire retains one of the strongest balance sheets in corporate America. Its repurchase policy requires consolidated cash and Treasury holdings to remain above US$30 billion, leaving Abel with substantial capacity for further investments or acquisitions.
Why investors should care
Capital allocation has become the defining issue for Berkshire since Buffett stepped down as chief executive.
The company’s enormous size makes it increasingly difficult for smaller investments to influence overall results. Holding hundreds of billions in cash protects Berkshire during economic downturns, but it can also weigh on shareholder returns when acquisition opportunities remain scarce.
Abel’s first major moves suggest continuity with Buffett’s disciplined approach but a greater willingness to act when valuations become attractive. The combination of external stock purchases, acquisitions and Berkshire buybacks also shows that management is not relying on one route to generate returns.
Investors should still watch Geico’s deteriorating underwriting performance, weaker consumer demand across several subsidiaries and whether Alphabet delivers the returns Berkshire expects.
For now, however, rising operating profits and the return to active investing have helped ease concerns about Berkshire’s succession. Monday’s share-price response indicates that investors are beginning to judge Abel on his own capital-allocation record rather than solely against Buffett’s legacy.
