Berkshire Gains 8.9% in October as Investors Rotate Out of AI Stocks
While the market’s AI darlings had a rough October, one of America’s oldest-fashioned conglomerates quietly had one of its best months in years. Berkshire Hathaway’s Class B shares rose 8.9% in October, even as the S&P 500 slipped 0.9% and the tech-heavy Nasdaq Composite fell 5.3%, according to CNBC. The gap is a clear signal of where investor money has been moving: away from high-spending AI growth stories and toward steady cash generators.
The divergence sharpened on Friday, when the Nasdaq dropped 2.9%, its worst single day since June, as worries about the cost of the AI buildout spread across Wall Street. Berkshire, by contrast, touched a fresh all-time intraday high the same day.
Record Highs, Then a Pause
Berkshire’s run produced a string of records. Class A shares closed at a record $821,931 on Monday, Oct. 26, and Class B shares set a record close of $548.56 that same day, CNBC reported. On Friday, Class B shares hit an intraday high of $550.47, edging past the prior record of $549.96, before closing at $542.49.
The momentum did cool late in the month. For the week, Class A shares finished up just 0.3% at $815,600, and Class B shares gained less than 0.1%. According to EconoTimes, citing S&P Global Market Intelligence price data, Class B shares climbed from $497.95 at the Sept. 30 close to $542.49 on Oct. 30.
CNBC notes that the rally has fully erased a roughly 15% pullback that followed Warren Buffett’s announcement last year that he would step down as CEO. Berkshire is now led by Greg Abel, and its market value stands at about $1.16 trillion.
Why Investors Are Rotating Into Berkshire
The backdrop is a growing unease about how much the largest tech companies are spending on AI. The Associated Press reported that the S&P 500 fell 1.8% to 7,580.07 on Friday, with the Nasdaq closing at 25,437, and tied the selloff to concerns about AI valuations and the scale of investment the technology requires, as cited by EconoTimes.
Berkshire offers almost the opposite profile. Its earnings come largely from insurance, the BNSF railroad, utilities and energy, and a wide spread of manufacturing and service businesses. Its trailing price-to-earnings ratio sits around 13.6, and it reported $365.5 billion in cash as of June 30, according to CNBC. In a market questioning whether AI spending will pay off, a business that throws off cash and trades at a modest multiple looks more appealing.
The Alphabet Wrinkle
Berkshire isn’t entirely insulated from the AI selloff. One of its largest stock holdings is Alphabet, which plunged almost 13% on Thursday, its worst day since its 2004 public debut, erasing about $500 billion in market value, according to CNBC.
Alphabet’s third-quarter report showed revenue of $127.6 billion, up 25% from a year earlier, but negative free cash flow of about $9.1 billion after capital spending of roughly $51.4 billion, according to company figures cited by EconoTimes. CNBC noted analysts had expected negative free cash flow of $2.7 billion, and that search revenue missed estimates for a second straight quarter.
CNBC estimates Berkshire’s Alphabet stake, which peaked at about $40 billion in early August, had fallen to around $29.6 billion by Friday, based on shares held as of June 30. That drop makes it Berkshire’s fourth-largest equity holding, with Coca-Cola moving into third place at about $37.6 billion. The September 30 holdings snapshot, due in about two weeks, will show whether the position changed during the quarter.
Other Portfolio Moves
Berkshire also trimmed its DaVita stake again, selling $69 million of shares this week, according to an SEC disclosure reported by CNBC. The sale is part of a 2024 agreement to keep its ownership at or below 45% as DaVita buys back stock, rather than a change of view; the remaining 28.3 million shares are worth about $5.3 billion.
Separately, Berkshire completed a further $330 million investment in Italian software company Bending Spoons, lifting its stake to about 4%, according to Ad-hoc News. The deal was structured as a private placement of 10 million newly issued shares at $33 each.
What to Watch in the Q3 Report
Investors now turn to Berkshire’s third-quarter results. The Zacks consensus calls for revenue of about $97.3 billion, up 2.5% year over year, and earnings of $5.91 per Class B share, down 5.6%, according to Zacks, via Yahoo Finance. Zacks expects favorable insurance pricing and reinsurance results to help offset softer performance at GEICO, while BNSF may benefit from higher freight volumes but face higher fuel and wage costs.
Beyond the headline numbers, the market will be listening for how Abel plans to use Berkshire’s large cash pile, and whether buybacks continued after the $4.5 billion repurchased in the second quarter. UBS raised its Class B price target to $628 from $604 on Oct. 22 and kept a buy rating, Ad-hoc News reported.
Why It Matters for Business Readers
October’s split between Berkshire and the Nasdaq is a reminder that market leadership can turn quickly. When investors start questioning the return on massive capital spending, they tend to reward companies that already generate dependable cash. For business owners and investors, the lesson is less about any single stock and more about balance: portfolios heavily tilted toward a single theme, even a powerful one like AI, can swing hard when sentiment shifts.
That doesn’t mean AI is fading. Alphabet’s 25% revenue growth shows demand is real. But the market is now demanding proof that the spending turns into profit, and that’s a test every company investing in AI will face.
The Bottom Line
Berkshire Hathaway ended October near record highs, up 8.9% while the Nasdaq fell 5.3%, as investors rotated out of costly AI bets and into steady earners. Its own Alphabet stake took a hit along the way, and its upcoming third-quarter report will show whether the operating businesses justify the stock’s new highs.
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Edited by Palawan @QUE.COM
Website: https://QUE.COM Intelligence
Sponsored by: https://MAJ.COM AI Autonomous
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On the Alphabet wrinkle, the call adds context the headline cash flow figure leaves out. CFO Anat Ashkenazi said Q3 free cash flow was also hit by an inventory build to support TPU system sales and by paying the EC fine, and trailing twelve-month free cash flow was still $19.7 billion, with $265.1 billion of cash and marketable securities. The harder part for a value holder like Berkshire is the outlook: the $195 to $205 billion 2026 capex guide stayed, and she said “We continue to expect our CAPEX to increase significantly in 2027”. The full call, by speaker: https://equibles.com/stocks/googl/calls/2026-q3
Data: Alphabet Q3 2026 earnings call transcript, processed by Equibles.
Hi Daniel, thank you for this excellent and detailed analysis! You are absolutely right that the headline free cash flow figure does not tell the full story. The inventory build for TPU sales and the EC fine payment are important one-time factors that context helps clarify.
The $19.7 billion trailing twelve-month free cash flow alongside $265.1 billion in cash and marketable securities does show Alphabet’s underlying financial strength remains solid. However, as you correctly point out, the capex trajectory is the real concern for value-oriented holders like Berkshire — the $195-205 billion 2026 guide plus the expectation of significant further increases in 2027 is a massive capital deployment that will pressure free cash flow for years to come.
Appreciate you sharing the full earnings call transcript link from Equibles. It is a great resource for readers who want to dig deeper into the speaker-by-speaker breakdown. Thank you for adding such valuable context to the discussion!