Berkshire Hathaway Trails S&P 500 by 16.3 Points, Widest 2026 Gap
1h ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
berkshire-hathawaywarren-buffett
Fazen Markets Editorial Desk
Collective editorial team · methodology
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Berkshire Hathaway's widely held B shares are now underperforming the S&P 500 benchmark index by 16.3 percentage points for the year-to-date period, marking the widest performance gap recorded so far in 2026. CNBC reported the divergence on May 30, 2026. The development highlights a significant departure from historical patterns where the conglomerate, led by Warren Buffett, often kept pace with or exceeded the broader market.
This year's underperformance represents a stark reversal from Berkshire's 2022 outperformance, when its focus on value and financial stability saw it beat the S&P 500 by over 12 percentage points during a tech-led market correction. The current macro backdrop features a concentrated market leadership dominated by mega-cap technology stocks, with the "Magnificent Seven" cohort driving a disproportionate share of index gains. This environment has compressed valuations for traditional value sectors like insurance, energy, and industrials, which form the core of Berkshire's equity portfolio.
What changed now is the market's singular focus on artificial intelligence and productivity gains, eclipsing the fundamental, cash-flow-heavy investment philosophy that has defined Berkshire's strategy for decades. The catalyst for the widening gap in late May was a surge in semiconductor and software stocks following strong earnings reports, while Berkshire's key holdings saw muted reactions to their own solid quarterly results. This divergence underscores a shift in investor preference from tangible assets and operational earnings to growth narratives centered on technological disruption.
The year-to-date return for Berkshire Hathaway Class B shares (BRK.B) is approximately 4.1% through May 30, 2026. The S&P 500 Index has returned roughly 20.4% over the same period. This creates the 16.3 percentage point deficit, the largest year-to-date gap since 1999, when Berkshire underperformed the index by 19.5 points for the full year during the dot-com bubble.
Berkshire's market capitalization stands near $950 billion, making it one of the largest public companies by this measure. The company's cash pile, a closely watched metric, was reported at $189 billion in its last quarterly filing. In comparison, the technology-heavy Nasdaq Composite Index has advanced 24.7% year-to-date, outperforming even the S&P 500. Peer financial conglomerates like Markel Group have similarly lagged, up only 5.8% for the year, suggesting a sector-wide headwind.
| Metric | Berkshire Hathaway B Shares (BRK.B) | S&P 500 Index (SPX) | Difference |
|---|---|---|---|
| YTD Return (as of May 30, 2026) | +4.1% | +20.4% | -16.3 ppts |
| Q1 2026 Operating Earnings | $12.7 Billion | N/A | N/A |
The underperformance signals a challenging environment for deep-value investors and fund managers who benchmark against the S&P 500. Sectors directly tied to Berkshire's largest equity holdings face pressure. This includes insurers like GEICO (a subsidiary) and American International Group (AIG), which Berkshire holds a stake in, as well as banks like Bank of America (BAC) and consumer brands like Coca-Cola (KO).
A key counter-argument is that Berkshire's fortress balance sheet and massive cash position provide significant downside protection during market corrections, a feature not reflected in short-term performance metrics. The current divergence may present a long-term buying opportunity for investors betting on a reversion to mean performance, especially if technology valuations contract.
Positioning data shows institutional funds have been rotating capital out of value-focused equity strategies and into momentum-driven growth funds in recent weeks. Flow data indicates net outflows from financial sector ETFs, while technology-focused funds continue to see strong inflows, reinforcing the trend pressuring Berkshire's relative performance.
The next major catalyst for Berkshire Hathaway is its annual shareholder meeting, scheduled for the first weekend of May 2027, where Warren Buffett and Charlie Munger's commentary could influence sentiment. Key levels to watch include the $450 per share level for BRK.B, which represents a critical technical support zone tested earlier in 2026. The 200-day moving average for the S&P 500, currently near 5,200, will indicate the health of the broader trend pressuring Berkshire.
Investors should monitor the Federal Reserve's policy stance, with the next FOMC meeting set for June 17-18, 2026. A pivot toward rate cuts could benefit Berkshire's financial holdings. Quarterly earnings from Apple (AAPL), Berkshire's largest single common stock holding, on July 23, 2026, will also be pivotal, as its performance significantly impacts the conglomerate's book value.
Not necessarily. Buffett's strategy is inherently long-term and cyclical. Historical precedent, notably during the 1999-2000 dot-com bubble, shows similar periods of significant underperformance followed by strong rebounds when market leadership rotated back to value. The strategy's success is measured over decades, not single years, and is built on purchasing companies at discounts to their intrinsic value, which may be out of favor in the current market.
The impact is mixed. Berkshire Hathaway is not a component of the Dow Jones Industrial Average, so its direct performance does not affect that index. However, several of Berkshire's major holdings, such as American Express (AXP) and Coca-Cola (KO), are Dow components. Their weaker relative performance, tied to the same value headwinds, can be a drag on the price-weighted Dow compared to the cap-weighted S&P 500.
Since 1965, Berkshire Hathaway's book value per share has compounded at an annual rate of approximately 19.8%, significantly outperforming the S&P 500's total return of 9.9%. This long-term average shows a nearly 10 percentage point annual advantage. However, this includes many years of dramatic outperformance. The current 16-point deficit year-to-date is notable because it represents one of the largest short-term deviations below this long-term trend in the conglomerate's history.
The record performance gap underscores a market rotation away from the cash-generative, value-oriented stocks that define Berkshire's portfolio toward high-growth tech narratives.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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