Berkshire Hathaway’s Q1 2025 operating earnings plunged 14.1% to $9.64 billion, sending its Class B shares tumbling 6.3%. Japanese yen swings and Southern California wildfire losses of $1.1 billion hammered the insurance segment, while other divisions held steady. Cash reserves swelled to $347.7 billion as trade policy fears stalled buybacks. Despite the shock, Berkshire’s stock had outperformed the S&P 500 year-to-date – though Buffett’s famous patience may soon be tested.
The mighty Berkshire Hathaway stumbled in the first quarter of 2025, with operating earnings plunging 14.1% to $9.64 billion. The drop, steeper than analysts expected, sent shockwaves through Wall Street and triggered a 6.3% nosedive in the company’s Class B shares to $505.66.
Insurance underwriting took the biggest hit. The segment’s profits crumbled under the weight of Japanese yen fluctuations and mounting trade policy uncertainties. Southern California wildfires caused devastating losses of $1.1 billion. Meanwhile, Berkshire’s other businesses – transportation, energy, and retail – managed to keep their heads above water with steadier results. The earnings report arrived just days before the annual shareholders meeting in Omaha.
The company’s cash pile? It’s getting ridiculous. Berkshire’s cash and equivalents swelled to a jaw-dropping $347.7 billion, up from $334.2 billion last quarter. Asset sales padded the coffers, but here’s the kicker – they didn’t buy back a single share. Not one. The lack of share buybacks significantly impacts the company’s earnings per share calculations, affecting overall valuation metrics.
Berkshire’s mountain of cash reaches absurd heights, with over $347 billion sitting idle while opportunities remain elusive.
Trade wars aren’t helping. Management’s warnings about tariffs and global trade uncertainty cast a long shadow over future profits. The geopolitical landscape is about as stable as a jenga tower in an earthquake, and Berkshire’s brass knows it.
Despite the earnings mess, Berkshire’s stock had been on a tear before the news broke, climbing 19% year-to-date and hitting all-time highs. That’s quite the contrast to the S&P 500’s modest 3% decline during the same period. But reality hits hard, and the combination of weak earnings and Buffett exit news sent investors heading for the exits.
The annual shareholders meeting drew its usual crowd of devoted followers, all keen for answers about the company’s mounting cash reserves and apparent investment paralysis. Management’s message? Finding suitable investment targets is like finding a needle in a haystack – if the needle cost billions and came with a guaranteed return.
The company’s conservative stance speaks volumes. With macroeconomic headwinds strengthening and trade policies shifting like desert sands, Berkshire seems content to watch and wait, its massive cash pile growing ever larger.
