Berkshire Hathaway up 13.6% as investors flee AI stocks

Berkshire Hathaway's appeal as a defensive holding has reasserted itself as investors rotate out of the AI-linked tech names that drove the broader market higher. The conglomerate's class B stock is up 13.6% so far this year, ahead of the S&P 500's 7.8% gain, and the gap widened sharply after Oct. 1: Berkshire has climbed 14% since then while the S&P has fallen about 4%. That pattern echoes earlier periods of market stress, when Berkshire's collection of railroad, energy and manufacturing businesses provided ballast.

Yet the company is not insulated from the swings it is attracting money away from. Its third-quarter earnings report, filed on Saturday, showed investment gains plunged 46% from a year earlier to $9.4 billion. Berkshire bought $2.4 billion of stocks and sold some $2.8 billion during the quarter, while growing its "commercial, industrial, and other" equities by $2.3 billion on a cost basis and cutting its "banks, insurance and finance" stake by $400 million.

Under CEO Greg Abel, who took over from Warren Buffett at the start of this year, Berkshire has accelerated stock repurchases and drawn down its cash pile. It bought back $9.6 billion of its own stock in the third quarter, more than double the second-quarter pace, and about $2 billion more in the first four weeks of the fourth quarter. Abel also agreed in July to buy home builder Taylor Morrison for $6.8 billion, breaking a long drought without a major acquisition. The company's traditional businesses delivered strong profits in the third quarter, though insurance underwriting tumbled, even as the AI boom has boosted the broader economy: U.S. GDP expanded 3.4% in the third quarter, up from 2.2% in the second.