Key Highlights
- First-quarter operating income reached $11.35 billion, reflecting an 18% annual increase
- Company’s cash reserves climbed to an unprecedented $397.38 billion amid limited acquisition opportunities
- Greg Abel, Warren Buffett’s successor who assumed the CEO role in January, pledged strategic capital allocation
- Insurance segment earnings increased 4% to $4.4 billion; BNSF railway earnings surged 13% to $1.38 billion
- Analysts at Morningstar continue to value Class A shares at $765,000, assigning a four-star rating
Berkshire Hathaway delivered first-quarter operating income of $11.35 billion on Saturday, marking an 18% increase from the $9.64 billion reported in the same period last year. This quarterly release represents the inaugural earnings announcement under Greg Abel’s stewardship, following his appointment as CEO to succeed Warren Buffett at the beginning of 2026.
Berkshire Hathaway Inc., BRK-B
The financial performance aligned with projections from Greggory Warren, an analyst at Morningstar. The research firm upheld its valuation of $765,000 for each Class A share ($510 for Class B shares) while maintaining its four-star assessment, characterizing the stock as trading below its intrinsic value.
Berkshire’s stock has declined approximately 6% year-to-date, lagging behind broader market indices.
The conglomerate’s cash reserves expanded to an all-time high of $397.38 billion, building on previous quarters, as management remained unable to identify acquisitions meeting its stringent valuation criteria. During the first quarter, the company repurchased $234 million of its shares — marking its first buyback activity since May 2024 — though no additional repurchases occurred during the initial two weeks of April.
Adjusted operating revenue increased 4.4% on an annual basis to $93.7 billion. Book value per share expanded 11.1% year-over-year, reaching $505,723.
During Saturday’s annual shareholder gathering, Abel addressed questions regarding the deployment of the company’s substantial cash position.
“Market dislocations will create opportunities for us to take action,” he explained, noting that the company maintains a curated list of potential acquisition candidates it would pursue under favorable pricing conditions.
Buffett, who attended the meeting in person, publicly endorsed his successor’s performance. “Greg is handling everything I managed and more, executing it better across the board,” Buffett stated.
Insurance and Railway Operations Drive Performance
The insurance division’s operating income grew 4% to $4.4 billion. This represents improvement compared to the prior year, when California wildfire events negatively impacted reinsurance outcomes. Despite this progress, Geico experienced a 35% decline in pre-tax underwriting income, attributed to elevated accident claim frequency and increased marketing expenditures.
BNSF railway delivered exceptional results, with earnings climbing 13% to $1.38 billion. Enhanced demand for grain transportation, petroleum fuels, oilseeds and meal products fueled this growth. Morningstar analysts highlighted that BNSF continues to underperform Union Pacific, with an operating ratio differential of approximately 425 basis points.
Berkshire Hathaway Energy recorded a modest 2% increase, supported by robust natural gas pipeline revenues driven by cold weather-related demand. Ongoing wildfire litigation and potential legislative measures affecting renewable energy projects remain areas of concern for this business segment.
The manufacturing, service and retail portfolio generated a 5% profit improvement to $3.2 billion, partially attributable to the OxyChem transaction, though profitability faced headwinds from cost inflation.
Abel Outlines Approach to Technology and Corporate Structure
Addressing artificial intelligence adoption, Abel revealed that select Berkshire operations — including BNSF — have begun implementing AI solutions to address particular operational challenges. He emphasized the company’s pragmatic approach to technology investment.
“We won’t pursue AI simply for the sake of pursuing AI,” Abel declared. “Currently, we’re deploying it to address concrete operational challenges within our businesses.”
Abel also dismissed concerns that Berkshire’s scale would impede agility. “As a conglomerate, our philosophy centers on eliminating bureaucracy,” he stated.
Greggory Warren from Morningstar observed that insurance pricing dynamics have stabilized following several years of favorable conditions, though first-quarter underwriting performance remained healthy without significant catastrophe losses during the period.
