Berkshire Hathaway outperformed Magnificent 7 tech stocks

Investors would have been better off buying shares in Berkshire Hathaway instead of the Magnificent 7 to start 2024. The Magnificent 7 includes major tech companies like Apple, Nvidia, and Microsoft. This group had a strong performance fueled by interest in artificial intelligence. However, in recent months, they have struggled. The CNBC Magnificent 7 Index reported a 43.4% increase since January, but Berkshire Hathaway outperformed this group with a 46.3% gain during the same period. Chris Verrone from Strategas noted that Berkshire's Class B stock, known as BRK/B, would have been a safer investment choice at the start of the year. The tech stocks fell by 13% due to rising economic uncertainties, especially during the early months of the Trump administration. Concerns over higher tariffs and increased AI investments affected investor confidence. So far in 2025, all seven stocks in the Magnificent 7 have seen losses, while Berkshire continues to rise, gaining more than 15%. This trend shows a shift in market leadership towards safer investments. Berkshire Hathaway, with its strong insurance business and cash reserves, seems to be a preferred choice for investors now. Tesla has been the biggest loser among the Magnificent 7, dropping by nearly 50% since its record high in December. Microsoft, despite being an outperformer, is down 13% from its peak. Apple's stock has also fallen by 14% this year. Interestingly, Warren Buffett has reduced his Apple stake by two-thirds over the past year, avoiding large losses. Experts suggest that the declining fortunes of the Magnificent 7 highlight the risks of investing in stocks that have previously performed well. Meanwhile, Berkshire Hathaway is boasting impressive profits. The company reported a 71% increase in operating profits in the fourth quarter, reaching $14.5 billion. Profits from insurance underwriting surged by an incredible 302% compared to the previous year.