Berkshire Hathaway is currently experiencing its most significant performance lag against the S&P 500 so far in 2026. While the benchmark index has surged to record highs, fueled by a massive rally in technology stocks driven by artificial intelligence optimism, Berkshire’s B shares have struggled to keep pace. As of late May, the conglomerate’s shares are trailing the S&P 500 by 16.3 percentage points year-to-date, a stark contrast to the narrow lead the company held at the end of the first quarter.

The divergence highlights the fundamental difference in strategy between Berkshire’s conservative, cash-heavy approach and the current market obsession with AI infrastructure spending. With nearly $400 billion in cash reserves and a portfolio centered on stable, profitable operating businesses, Berkshire remains largely insulated from the volatility of high-growth tech stocks. While some analysts suggest this caution could prove beneficial if the current AI investment trend proves to be a bubble, the market’s current momentum has left the company’s stock down 12% from its May 2025 peak.

Despite the company’s traditional aversion to tech, there have been signs of shifting priorities under new CEO Greg Abel. In a notable departure from the investment philosophy long championed by Warren Buffett, the company tripled its stake in Alphabet during the first quarter, making it the fifth-largest equity holding in the portfolio. Market observers note that the relative performance ratio between Berkshire and the S&P 500 has reached its lowest point since 2007, suggesting a potential shift in how the conglomerate is viewed as a market bellwether.

In other developments, Berkshire’s BNSF railway continues to play a central role in the opposition against a proposed $85 billion merger between Union Pacific and Norfolk Southern. The U.S. Surface Transportation Board has paused its review of the deal, citing concerns over competition and underdeveloped aspects of the application. BNSF has been a vocal critic of the merger, aligning itself with a coalition of labor unions and customers to block the creation of the nation’s first transcontinental freight railroad, while simultaneously focusing on its own collaborative efforts to streamline coast-to-coast shipping.