Warren Buffett’s mood is at odds with that of the broader stock market.
The S&P 500 keeps notching fresh records and tech stocks, particularly those exposed to artificial intelligence, are on a tear. But the Sage of Omaha appears to be far more cautious—and even resigned to a lack of opportunities.
Berkshire Hathaway’s cash pile rose to a record $167.7 billion at the end of 2023, but the revered investor doesn’t know what to do with it right now.
There’s no possibility of “eye-popping performance,” he said in his annual letter to shareholders, adding that only a handful of companies can move the needle at Berkshire—and the company has picked them endlessly. He sees no meaningful options outside the U.S., either.
It’s all rather disheartening, actually. Buffett’s lack of enthusiasm may also be a warning. After all, he once said: “Be fearful when others are greedy, and be greedy when others are fearful.”
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Maybe the market ought to be more fearful than it currently is. The delayed timeline for interest-rate cuts has largely been ignored in recent months as stocks have charged higher.
Fear may well creep in this week, with the Federal Reserve’s preferred inflation metric—core PCE—coming Thursday. A hot reading could at least halt the market’s recent rally—though it seems to be more preoccupied with the AI frenzy, which Berkshire has opted not to join.
In fact, Buffett took aim at the market’s “casino-like behavior” in his letter. Investors chasing this frothy market higher are certainly taking a gamble.
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Berkshire Hathaway Cash Pile Grows Amid Dearth of Acquisitions
CEO Warren Buffett noted the lack of meaningful acquisition targets that would lead to “eye-popping performance” for his conglomerate. He reiterated in his annual letter to shareholders that Berkshire has no interest in buying or managing
despite holding a 27.8% stake at year end.
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- Berkshire Hathaway’s cash-on-hand rose to a record $167.6 billion at the end of 2023, as its operating earnings grew 21% to $37.4 billion, compared with 2022. Insurance underwriting earnings swung to a $5.4 billion profit, from a loss of $30 million in 2022.
- Buffett said Berkshire’s massive scale means only a handful of companies are capable of moving the needle at Berkshire, and none are outside the U.S. Berkshire spent $2.2 billion on stock buybacks in the fourth quarter, for a total of about $9.2 billion in 2023.
- Buffett expressed disappointment in the performance of Berkshire’s BNSF railroad, whose operating earnings fell 14% in 2023, to $5.1 billion, and of the Berkshire Hathaway Energy utility business, whose operating earnings dropped 40%, to $2.3 billion.
- Buffett credited his longtime friend and business partner Charlie Munger, who died in November at age 99, with being the architect of Berkshire’s approach to buying undervalued businesses. He called himself merely the general contractor implementing Munger’s vision.
What’s Next: Berkshire’s annual shareholders’ meeting will be May 4, in Omaha, Neb., where Buffett will be joined onstage by Greg Abel, his anointed successor, and Ajit Jain, who runs Berkshire’s insurance operations. Buffett, 93, said Abel “in all respects is ready to be CEO of Berkshire tomorrow.”
—Nicholas Jasinski and Janet H. Cho
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Supreme Court Hears Arguments on Social Media Content Moderation
The Supreme Court will hear arguments in two free-speech cases today that have implications for social media sites such as
and X. The laws in Texas and Florida seek to curb social media companies’ content-moderation policies, saying they are muzzling conservative voices.
- Texas and Florida passed laws in 2021 in response to claims of conservative censorship, which the tech industry has disputed. The laws have similar provisions, including limits on the choices social-media platforms have to control posted content. In Florida, they can’t ban political candidates or silence their posts.
- The states argue social-media platforms are equivalent to town squares and private companies shouldn’t interfere in public debate. Tech trade groups sued to block the laws, arguing they could force companies to publish objectionable content such as hate speech.
- The court’s decision could come down to how it views social media, whether the companies that run them are like news publishers with a First Amendment right to editorial discretion or whether they are more like telecommunications firms, merely providing a vehicle for communication.
- The states argue that social media companies are the latter, or common carriers, along with internet service providers and airlines. The tech companies say they are publishers of curated content. Decisions in the cases, NetChoice v. Paxton and Moody v. NetChoice, are expected by July.
What’s Next: The Supreme Court will hear arguments in March on similar grounds. A lawsuit by Missouri and Louisiana argues the Biden administration violated free speech by pressuring social-media platforms to remove posts it claimed were spreading misinformation during the pandemic.
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AI-Enabled Smartphones Will Star in Global Trade Show
Artificial intelligence in smartphones will be a key focus at the Mobile World Congress, the world’s largest mobile and communications trade show, in Barcelona this week.
Apple
’s
absence gives its rivals an opening to tout their own innovations in the global spotlight.
- South Korean conglomerate
plans to showcase its AI-enabled Galaxy S24 Ultra smartphone, with features such as live translation, and its Galaxy Watch6 smartwatches with sensors to track fitness, heart rate, and sleep patterns. Its first wearable Galaxy smart ring is expected to launch later this year.
- AI-capable smartphones are expected to grow to 45% as a share of the global market in 2027, from 5% this year, research firm Canalys said. Apple is expected to make its own AI announcements at its developers conference in June.
-
Alphabet
’sGoogle has already integrated AI into the Pixel 8 Pro smartphone, scaling down its Gemini model to a “Nano” version that is also powering much of the AI in Samsung’s S24 smartphones. Google DeepMind CEO Demis Hassabis will talk about “Our AI Future.”
- China’s Honor, one of the top-selling Chinese smartphone brands, is launching its Magic 6 Pro smartphone globally at MWC. Magic 6 comes with a 7-billion-parameter large language AI model, and Honor says its operating system can predict a user’s intentions.
What’s Next: Chip maker
is working with Germany’s
the largest shareholder of
to introduce a smartphone that uses an AI assistant controlled by voice and text instead of an app.
—Adam Clark and Janet H. Cho
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Retail Earnings Will Show Consumers’ Spending Resilience
Retail earnings reports and forecasts from companies including Macy’s, Urban Outfitters, TJX Cos., and Best Buy will offer insight into consumer discretionary appetites this year. Amid rising inflation, traditional stores have been battered by competition from discounters and online sites.
-
reports earnings on Tuesday amid an activist campaign. Investment firm Arkhouse Management nominated nine people to the board of Macy’s, and the department store said it would evaluate the candidates and make a recommendation before its annual meeting.
- Macy’s already rejected an unsolicited $5.8 billion takeover bid from Arkhouse Management and Brigade Capital. Macy’s has also trimmed its workforce by 3.5%, announced plans to close stores, and made way for Tony Spring as its new CEO.
-
also reporting Tuesday, brought on
veteran Shea Jensen as president of its North America Urban Outfitters, and said holiday-season sales jumped 10%, driven by Free People and Anthropologie stores. Analysts say younger shoppers’ spending remains constrained because of several factors including student loan repayments.
- Discount chain
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TJX Cos.
,parent of T.J. Maxx and Marshalls, reports Wednesday. William Blair analysts said TJX could benefit from a yearslong migration of shoppers from department stores to off-price retailers, MarketWatch reported.
What’s Next: Analysts expect consumer electronics retailer
Best Buy
,
which reports Thursday, to benefit as people upgrade and replace devices they bought during the early days of the Covid-19 pandemic, MarketWatch reported.
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Luna Lander Tips Over, Intuitive Stock Plummets to Earth
Intuitive Machines had an epic week, completing the first American soft landing on the moon in roughly a half-century. But the stock plunged 32% to $6.55 a piece in the Friday aftermarket and was down again the early Monday premarket after the Luna lander tipped over on landing.
- Intuitive Machines stock had started the month under $4 a share with about two million shares trading each day. The stock price, volatility, and trading volume increased materially as the company embarked on its first space mission.
- But news that the lunar lander was on its side spooked investors and the stock drop came even though NASA called the mission a success and all the scientific payloads were operational.
- It’s a good reminder to be cautious and realize that big price moves don’t always mean an underlying business is more valuable.
What’s Next: As for what Intuitive Machines is worth, investors can look to Wall Street for some help. Four analysts cover the company. The average analyst price target is $10.75 a share. That can be a starting point for investors interested in looking at the long-term prospects of the company.
—Al Root and Rupert Steiner
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MarketWatch Wants to Hear From you.
Layoffs have hit several industries, leaving workers wondering if there’s a way to prepare ahead of time. What are some steps a worker can take and when should they be taken?
A MarketWatch correspondent will answer this question soon. Meanwhile, send any questions you would like answered to [email protected].
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—Newsletter edited by Liz Moyer, Patrick O’Donnell, Rupert Steiner
