Key Highlights
- First quarter operating profit reached $11.35 billion, marking an 18% increase from the previous year
- Company’s cash reserves swelled to an unprecedented $397.38 billion amid ongoing challenges in identifying attractive acquisition opportunities
- Greg Abel, the newly appointed CEO who succeeded Warren Buffett this past January, emphasized a measured approach to capital allocation
- The insurance division generated $4.4 billion in profit, representing a 4% gain; railway operations at BNSF delivered $1.38 billion, up 13%
- Analysts at Morningstar continue to value Class A shares at $765,000, assigning a four-star rating to the stock
Berkshire Hathaway announced first quarter operating profit of $11.35 billion over the weekend, representing an 18% improvement compared to the $9.64 billion recorded in the same period last year. This marks the inaugural financial disclosure under Greg Abel’s stewardship, following his appointment as CEO at the beginning of 2026 after Warren Buffett’s retirement.
Berkshire Hathaway Inc., BRK-B
The financial performance aligned with projections from Morningstar’s Greggory Warren. The research firm maintained its valuation of $765,000 for each Class A share (equivalent to $510 for Class B shares) while keeping its four-star assessment, indicating the shares remain attractively priced relative to intrinsic value.
Berkshire’s stock has declined approximately 6% year-to-date, trailing the performance of major market indices.
The conglomerate’s cash position expanded to an all-time high of $397.38 billion, growing from previous quarters as management remained unable to identify acquisitions meeting their stringent value 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 April’s opening two weeks.
Adjusted operating revenue increased 4.4% year-over-year to $93.7 billion. Book value per share advanced 11.1% from the prior year to $505,723.
Abel utilized Saturday’s annual shareholder gathering to tackle questions regarding the deployment of the company’s massive cash position.
“Market dislocations will eventually create opportunities for us to take action,” he explained, noting that Berkshire maintains a curated list of potential acquisition candidates it would pursue under favorable pricing conditions.
Buffett, present at the event, expressed strong support for his replacement. “Greg is handling everything I managed and more, and he’s executing at a higher level across the board,” Buffett stated.
Insurance and Railway Operations Drive Performance
The insurance segment’s operating profit expanded 4% to $4.4 billion. This represents an uptick from last year when devastating wildfires in Southern California impacted reinsurance outcomes. Conversely, Geico’s pre-tax underwriting profit fell 35%, attributed to elevated accident claim costs and increased expenditures on marketing initiatives.
BNSF railway operations delivered robust results, with profit climbing 13% to $1.38 billion. Increased shipping volumes for grain, petroleum products, oilseeds and related commodities fueled the growth. Morningstar observed that BNSF continues to lag behind Union Pacific in operational efficiency, with an operating ratio differential of approximately 425 basis points.
Berkshire Hathaway Energy recorded a modest 2% increase, benefiting from robust natural gas pipeline revenues associated with elevated heating demand during cold weather periods. Ongoing wildfire litigation and potential regulatory changes affecting renewable energy investments remain areas of concern for this business unit moving forward.
The manufacturing, service and retail portfolio posted a 5% profit gain to $3.2 billion, partially supported by the OxyChem acquisition, although profit margins experienced compression from elevated operating expenses.
Abel Articulates Vision on Technology and Organizational Structure
Regarding artificial intelligence adoption, Abel indicated that select Berkshire operations — including BNSF — have begun implementing AI technologies to address specific operational challenges. He made clear the company would maintain a pragmatic approach rather than pursuing technology trends indiscriminately.
“We’re not implementing AI simply because it’s fashionable,” Abel explained. “Currently, we’re applying it to address concrete operational challenges within our businesses.”
Abel also rejected concerns that Berkshire’s scale might impede agility. “As a diversified holding company, our philosophy is rooted in minimizing bureaucracy,” he emphasized.
Morningstar’s Greggory Warren observed that insurance pricing levels have stabilized following several years of favorable conditions, though first quarter underwriting performance remained healthy without significant catastrophe-related losses during the period.
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