Berkshire Hathaway Outperforms the Magnificent 7
Berkshire Hathaway has outperformed the Magnificent 7 since January 2024, gaining 46.3%, while the CNBC Magnificent 7 Index—which tracks Apple, Alphabet, Nvidia, Microsoft, Tesla, Meta, and Amazon—rose only 43.4% in the same timeframe.
This performance gap was reported by Chris Verrone, who is head of technical and macro research at Strategas, and he said, “Believe it or not, you would have been better off buying BRK/B than the Mag 7 to start ’24,” referring to Berkshire Hathaway’s Class B shares.
That difference came after the tech group dropped 13% going into 2025. All seven of those stocks have fallen in the first quarter of the year. That decline came while Berkshire Hathaway kept climbing, up over 15% in 2025 so far. The performance gap is now more visible as the Magnificent 7 struggles, and Berkshire Hathaway hits record highs.
Investors Move Out of Tech as Trump Tariffs Return
The sell-off in the tech sector followed rising economic concerns in the first months of President Donald Trump’s second term. Investors pulled money out of high-growth names as Trump’s tariff policies created fresh worries.
The White House confirmed the new round of reciprocal tariffs will begin on April 2, targeting any country that puts duties on U.S. imports. That created instability across equity markets. Stocks tied to AI spending and global manufacturing took the biggest hits.
Tesla had the worst drop among the seven, falling almost 50% since December. Microsoft fell 13% from its recent high. Apple dropped 14% this year. Apple is still one of Berkshire Hathaway’s top holdings, but Warren Buffett, who is now 94 years old, reduced his exposure by two-thirds in 2024. He ended the year holding 300 million shares, a cut that saved Berkshire Hathaway billions of dollars in losses when Apple’s stock slid.
The pullback in tech wasn’t isolated. Jason Pride, chief of investment strategy and research at Glenmede, said in March, “The Magnificent 7 stocks are down more than twice as much as the rest of the S&P 500, highlighting the risks of chasing recent winners.” That drop has led investors to look for stability.
Berkshire Hathaway’s Advantage in This Climate
Berkshire Hathaway’s advantage in this climate is its defensive business structure. The company owns Geico, one of the biggest insurance operations in the country, and it sits on hundreds of billions in cash. These qualities appealed to traders who needed somewhere safer to park capital.
Berkshire Hathaway’s Insurance Profits Gave It the Edge
Fourth quarter earnings showed why Berkshire Hathaway is outperforming. Its operating profit, which measures earnings from its businesses, hit $14.5 billion, a 71% increase year-over-year. Its insurance underwriting segment alone made $3.4 billion, up 302% from the same period a year ago. That spike in profits gave the stock another boost just as tech stocks started to slump.
The shift wasn’t just about earnings. It reflected how traders saw the broader market. Investors now have over 50% of their assets in stocks, the highest share ever recorded. But they aren’t betting on growth names. They’re choosing companies with strong balance sheets and reliable income.
Market Movement and Future Projections
As the week began, futures tied to the Dow Jones Industrial Average rose 233 points or 0.55%. S&P 500 futures went up 0.67%, and Nasdaq 100 futures climbed 0.81%. These gains followed a Friday close that helped the S&P 500 avoid a four-week losing streak.
Even with those gains, investors are nervous. The upcoming April 2 tariffs and the White House’s rhetoric on trade have added pressure. Over the weekend, Trump said there could be “flexibility” in how the tariffs are applied. But he didn’t say any specific exemptions would be granted, similar to his earlier talk about excluding some automakers.
The Wall Street Journal reported that the tariffs may be narrower than expected. A U.S. official told the press the duties could avoid some industry-specific categories. That report helped calm markets slightly, but uncertainty is still pretty high.
Bond Yields Rise as Traders Brace for More Volatility
The bond market showed how cautious traders are. After reports of narrower tariffs, demand for U.S. Treasuries dropped. The 10-year Treasury yield rose four basis points to 4.29%. German 10-year bond yields also rose by three basis points to 2.80%, breaking five straight days of gains. That movement signaled a temporary swing back to risk assets after a rough start to the year.
Yields had already dropped earlier in 2025 when markets feared a recession due to Trump’s return and renewed trade war threats. The 10-year U.S. yield fell from a high of 4.80% in January to where it stands now. But as fears eased slightly this week, those yields began to tick back up.
Investors Watch Economic Data
This week, investors are watching more economic data. On Tuesday, the market will get the consumer confidence report. On Thursday, they’ll see the initial jobless claims. These will show whether consumer sentiment and employment are holding up under Trump’s new economic strategy.
Meanwhile, Federal Reserve Chair Jerome Powell said last week that the effects of the tariffs would likely be short-term. He didn’t give any hint that the central bank would respond with changes to interest rates.
Global Reactions
Outside the U.S., the latest Purchasing Managers’ Index (PMI) for the eurozone showed a small increase in private sector activity. In Germany, output rose at its fastest pace in 10 months, driven by hopes that more government spending will offset any damage from U.S. tariffs. However, the result still fell short of analyst expectations. That disappointment caused German bunds to pare early losses.
China also responded to Trump’s moves. On Sunday in Beijing, Premier Li Qiang addressed foreign business leaders. He said China is prepared for “unexpected shocks,” referring to global trade instability.
“We have preparations for possible unexpected shocks, which, of course, mainly come from external sources,” Li said. He added that China will stick to multilateralism and global cooperation, even as the pressure from Washington increases. Meanwhile, Warren’s Berkshire Hathaway continues to benefit from this macro backdrop.
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