Key Highlights
- Operating income reached $11.35 billion in Q1, representing an 18% year-over-year increase
- The conglomerate’s cash reserves swelled to an all-time high of $397.38 billion amid limited acquisition opportunities
- Greg Abel, who assumed the CEO role from Warren Buffett in January, emphasized disciplined capital allocation
- The insurance division generated $4.4 billion in profit, up 4%; BNSF railway earnings surged 13% to $1.38 billion
- Morningstar analysts continue to value Class A shares at $765,000, assigning a four-star rating to the stock
Berkshire Hathaway delivered operating income of $11.35 billion for the first quarter on Saturday, marking an 18% improvement compared to $9.64 billion in the same period last year. This quarterly report represents the first under Greg Abel’s leadership, following his succession of 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 maintained its valuation of $765,000 for each Class A share (equivalent to $510 for Class B shares) and continues to assign a four-star rating, indicating the stock trades at a moderate discount to intrinsic value.
Berkshire’s stock has declined approximately 6% year-to-date, lagging behind broader market indices.
The conglomerate’s cash holdings expanded to an unprecedented $397.38 billion, climbing from previous quarters as the company continues its search for acquisitions that align with its stringent valuation criteria. During the first quarter, Berkshire repurchased $234 million worth of its 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% compared to the prior year, reaching $505,723.
At Saturday’s annual shareholder gathering, Abel directly addressed investor questions regarding the deployment of Berkshire’s substantial cash position.
“There will be dislocations in markets that will allow us to act,” he explained, noting that the company maintains a curated list of potential acquisition candidates it would pursue when pricing becomes attractive.
Buffett, who attended the meeting in person, publicly backed his successor’s approach. “Greg is doing everything I did and then some, and he’s doing it better in all cases,” Buffett stated.
Insurance Operations and Railway Division Show Strength
The insurance segment generated operating profit of $4.4 billion, up 4% year-over-year. This represents a recovery from the previous year when Southern California wildfires negatively impacted reinsurance performance. Nevertheless, Geico’s pre-tax underwriting profit declined 35%, pressured by elevated accident claim frequency and increased marketing expenditures.
BNSF railway delivered robust results with profit climbing 13% to $1.38 billion. Increased shipping volumes for grain, petroleum products, oilseeds and meal commodities fueled the growth. Morningstar analysts observed that BNSF continues to operate with an efficiency gap compared to Union Pacific, with operating ratios differing by approximately 425 basis points.
Berkshire Hathaway Energy recorded a modest 2% profit increase, benefiting from robust natural gas pipeline revenues driven by cold weather-related demand. The division faces ongoing monitoring of wildfire-related litigation and potential regulatory changes affecting renewable energy investments.
The manufacturing, service and retail operations segment saw profits rise 5% to $3.2 billion, partially boosted by the OxyChem acquisition, although profit margins experienced pressure from escalating operational costs.
Abel Addresses AI Strategy and Organizational Efficiency
Regarding artificial intelligence applications, Abel disclosed that select Berkshire operations — notably BNSF — have begun implementing AI technologies to address specific operational challenges. He emphasized the company’s pragmatic approach to technology adoption.
“We’re not going to do AI for the sake of AI,” Abel stated. “At this point in time, we’re using it to solve logical problems in our businesses.”
Abel also dismissed concerns that Berkshire’s scale might hinder agility. “As a conglomerate, we live by the fact that we hate bureaucracy,” he declared.
Morningstar analyst Greggory Warren observed that insurance pricing across Berkshire’s operations has stabilized following several years of exceptional results, while Q1 underwriting performance remained healthy with minimal catastrophe-related losses during the period.
