The stock price of Berkshire Hathaway, the investment company led by Warren Buffett, the "Oracle of Investing," reached an all-time high on the 7th (local time) thanks to strong second-quarter earnings this year. Wall Street is raising target prices one after another, expecting Berkshire Hathaway's stock price to rise further.
On this day in the New York stock market, Berkshire Hathaway's Class A shares rose 3.41% from the previous trading day to $551,920. As a result, the market capitalization swelled to about $792 billion. In particular, the stock price surged as much as 4.1% during the session to $555,800, surpassing the previous high of $544,000 recorded in March last year. The Class B shares, which have no voting rights, also closed at an all-time high of $362.58, up 3.6%.
The sharp rise in Berkshire Hathaway's stock price was driven by its second-quarter earnings this year. The company announced on the 5th that its net profit for the second quarter turned positive to $35.91 billion compared to the same period last year, and operating profit increased by 6.6% during the same period to $10.043 billion. This is the highest quarterly operating profit ever recorded.
This was due to strong operations of subsidiaries such as insurance companies and increased value of holdings like Apple amid the stock market rally. In particular, investments in Apple, Bank of America (BoA), and American Express, whose stock prices rose nearly 18% in the second quarter alone, resulted in unrealized gains on stock investments reaching $26 billion in the last quarter alone. The massive cash holdings also contributed to the improved earnings. The company's cash and cash equivalents increased by 13% from the previous quarter to $147.4 billion, the second-largest amount since 2014. Of this, holdings of U.S. Treasury bonds exceed $97 billion. CNBC reported that with rising U.S. Treasury yields, Berkshire Hathaway is expected to earn significant interest income going forward.
As Berkshire Hathaway's stock price soared, Buffett's assets, holding a 15% stake, also grew significantly. According to Forbes, Buffett's net worth reached $121.5 billion on this day, surpassing Bill Gates, co-founder of Microsoft (MS), to rank as the world's fifth-richest person.
In the securities industry, Berkshire Hathaway's stock price is expected to rise further. Brian Meredith, an analyst at UBS, said about Berkshire Hathaway, "We continue to believe this stock is an attractive investment in an uncertain macro environment," raising the one-year target price from $608,000 to $621,591. KBW analyst Myer Shields also raised the company's target price from $545,000 to $565,000.
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