There are some seriously powerful high-flying stocks in the market today. In fact, there are 10 stocks trading on U.S. exchanges that are each valued at more than $1 trillion in market capitalization. That's never been seen before.
Any company with a market value of more than $1 trillion is obviously very successful -- and that success typically comes with a valuation that makes the stock pretty expensive. So, what if I told you that there's one name on that list that is valued cheaper than the underlying S&P 500?
That stock is Berkshire Hathaway (BRK.A 0.82%) (BRK.B 0.80%). And I think you'll be kicking yourself a few years down the road if you aren't taking a position in this conglomerate now.
Image source: Getty Images.
Why Berkshire Hathaway is a stock to buy
Berkshire Hathaway is the only company with a $1 trillion valuation that has a forward P/E less than the greater market. With a ratio of 22.6 at this writing, it's valued less than the 23.2 forward P/E of the broad index. The next cheapest company on the list, Meta Platforms, has a forward P/E of 24.
This means Berkshire Hathaway is providing tremendous value. Over the last 60 years, Berkshire has delivered a compound annual gain of 19.9% per year -- nearly double what the S&P 500 provided in the same time period.
Today's Berkshire Hathaway has its fingers in a lot of companies. It owns insurances businesses, real estate, a railroad, and has interests in energy. It also has a stock portfolio that's been expertly run by Warren Buffett, the legendary CEO of Berkshire Hathaway, for decades.
How Berkshire Hathaway makes money
Berkshire Hathaway recorded revenue of $94.97 billion in the third quarter, up from $92.99 billion a year ago. And that money comes from a variety of sources.
|
Revenue Source |
Q3 2024 (in billions) |
Q3 2025 (in billions) |
Change |
|---|---|---|---|
|
Insurance |
$79.75 |
$81.66 |
2.4% |
|
Railroad, utilities, and energy |
$13.24 |
$13.30 |
0.4% |
|
Total revenue |
$92.99 |
$94.97 |
1.5% |
|
Investments |
$20.51 |
$21.93 |
6.9% |
Data source: Berkshire Hathaway 10-Q.
The company has produced slow but steady income growth and it breaks out its investment gains separately. At $21.9 billion in the most recent quarter, they are certainly notable and provide Berkshire Hathaway with a critical form of passive income that can be seen in the company's overall earnings.
Berkshire Hathaway is a money-printing machine. Earnings for the quarter were $30.79 billion, up from $26.25 billion a year ago. And earnings per share were a massive $14.28, a gain from $12.18 in the third quarter of 2024.
Berkshire Hathaway goes on to break down the massive impact that its investment portfolio has on its profitability.
|
Segment |
Q3 2025 Net Earnings (in billions) |
Percentage of Company Q3 2025 Earnings |
|---|---|---|
|
Insurance underwriting |
$2.36 |
7.7% |
|
Insurance investment income |
$3.18 |
10.3% |
|
BNSF Railway |
$1.45 |
4.7% |
|
Berkshire Hathaway Energy |
$1.49 |
4.8% |
|
Manufacturing, service, and retail |
$3.61 |
11.7% |
|
Investments |
$17.31 |
56.2% |
|
Other |
$1.38 |
4.5% |
|
Total earnings |
$30.79 | N/A |
Data source: Berkshire Hathaway 10-Q.
The bottom line? You can't ignore the massive impact that Berkshire Hathaway's stock portfolio has on the company's profits.
Buffett's closing message
One thing that may give investors pause about buying Berkshire Hathaway stock is that Buffett -- the Oracle of Omaha -- is stepping down as CEO at the end of the year. At 95, he certainly deserves retirement. In a letter to Berkshire shareholders, Buffett spoke highly of incoming CEO Greg Abel, as you would expect. He offered reassurance that the company's operating structure wouldn't change. And he devoted space to talk about what investors should expect from Berkshire Hathaway in the future.
NYSE: BRK.B
Key Data Points
While acknowledging there may be some businesses that will do better than his beloved company, Buffett also made a key prediction. "Berkshire has less chance of a devastating disaster than any business I know," he wrote. "And, Berkshire has a more shareholder-conscious management and board than almost any company with which I am familiar (and I've seen a lot)."
And even if the stock price falters, Buffett wrote, it will eventually bounce back. "Our stock price will move capriciously, occasionally falling 50% or so as has happened three times in 60 years under present management. Don't despair; America will come back and so will Berkshire shares."
And that's the secret sauce behind Buffett's investment style -- finding quality companies with outstanding, consistent returns, and holding for a long time. I think you can enjoy similar success buying Berkshire shares, which are undervalued when compared to other companies with a market cap of more than $1 trillion.
