Since Warren Buffett's retirement announcement in May, Berkshire Hathaway Inc (NYSE:BRK) (NYSE:BRK) has trailed the S&P 500 by roughly 26% — the steepest divergence in decades.
Critics say he completely missed the AI-fueled rally, but veteran investors know this script: Buffett often underperforms at the top of the cycle — only to swoop in and capitalize when the bust begins.
Track BRK slide since May, here.
With cash piling and growth names dominating, is Berkshire quietly positioning for a market reset?
Underperformance Hits Decades-Long High
Since May 2 — just before Buffett confirmed he would step down — Berkshire shares have slumped 14%, while the S&P 500 roared ahead by around 11%. That 25‑plus point gap ranks among Berkshire's worst short-term lags since the early 1990s, excluding COVID-19 pandemic turbulence.
Analysts note that declining investor confidence in Buffett's successor, Greg Abel, and reduced appetite for repurchases has eroded Berkshire's once‑valuable premium.
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Loaded With Cash, Shunning AI Hype
True to form, Berkshire avoided the AI frenzy — apart from Apple Inc (NASDAQ:AAPL), which was relatively late to the AI fest vis-a-vis its Magnificent 7 peers — and now holds over $340 billion in cash and T‑bills, roughly one‑third of total assets.
That discipline has left the firm looking passive or tone‑deaf in a fast‑moving, tech‑driven rally. But historically, Buffett's reluctance to chase performance is fertile terrain for bottom‑feeding bargains.
Underperformance As A Strategic Prequel
Value investors watch this story with fascination, not frustration. Over the years, Buffett underperformed the S&P more than half the time across daily, weekly and quarterly windows — but often with long‑run outperformance that followed sustained selloffs.
It’s a familiar pattern: when markets are euphoric, Buffett stacks cash. When they falter, he goes shopping.
Berkshire's recent lag isn’t just a quirk — it might be the calm before the storm. When growth-heavy bubbles burst, Buffett historically turns bearish sentiment into buying power.
Right now, it's not whether he's missed the AI rally — but whether the rally itself is ready to crack.
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