North Weekly
Berkshire Hathaway (BRKA -0.48%, BRKB -0.41%) shares have risen by 236% over the past decade, but critics note this underperforms the S&P 500’s total return. However, over 60 years, Berkshire’s stock has compounded at an annualized rate of 19.7%, beating the S&P 500’s 10.5%. Warren Buffett’s long-term track record is unmatched, and his successor, Greg Abel, must manage capital allocation for the $1.1 trillion company. Investors hope Berkshire’s shares will continue outperforming the S&P 500 in the coming decades. The article focuses on Apple as the critical stock holding that could help Greg Abel sustain Berkshire’s market-leading performance.
Apple remains Berkshire’s largest public equity holding. Berkshire first purchased Apple shares in Q1 2016, and since then, Apple’s stock has surged by 1,140%. At one point, Apple represented nearly half of Berkshire’s portfolio. Though Apple’s holding has since been trimmed, it remains the largest position, accounting for over 20% of Berkshire’s portfolio, valued at $73.8 billion. This makes Apple the most influential stock in Berkshire’s portfolio for Greg Abel’s ability to beat the market.
Despite Apple’s current valuation, with a price-to-earnings ratio of 37.2 and a 19% increase in 2026, the company’s brand, pricing power, and customer loyalty make it a standout. Apple’s financials are strong, with revenue growing 16.2% YoY through Q1 2026 (ended June 27) and robust free cash flow. The iPhone 17 family’s strong demand further supports its growth. Apple’s recent CEO transition, with John Ternus replacing Tim Cook, adds complexity, as Ternus must replicate Cook’s 15-year success of the 'Magnificent Seven' stocks, which surged over 2,200%.
However, challenges remain. Berkshire’s massive scale—$365.5 billion in cash and short-term Treasuries (34% of market cap)—limits investment opportunities. The company’s financial buffer protects it from market downturns but may hinder growth. Greg Abel faces an uphill battle to sustain Berkshire’s outperformance, given the constraints of size and limited high-quality investment candidates.
Source: The Motley Fool
