Berkshire Hathaway buys back $9.6 billion of stock as earnings dip and AI investments expand

Berkshire Hathaway Inc. repurchased roughly $9.6 billion of its own shares in the third quarter, indicating that executives consider the stock undervalued. The conglomerate reported operating earnings of $12.7 billion for the period, a 5.8% decline from a year earlier, as insurance underwriting dropped 43% amid higher losses at Geico and rising underwriting costs. Net investment income from insurance also fell 14% to $2.7 billion, reflecting lower short-term interest rates.

The buyback program began in the first quarter, the first such activity in more than a year, after Chief Executive Officer Greg Abel said the shares were trading below their intrinsic value. Despite a roughly 1% decline in Berkshire’s share price over the first nine months of the year, the A-share class has risen about 15% since then, while the S&P 500 index fell about 4% in the same span.

Cash holdings increased to $377.4 billion at the end of September; after accounting for $20.5 billion in unsettled Treasury-bill purchases, the net cash balance stood near $357 billion. The company sold a net $426 million of equity holdings during the quarter.

Greg Abel, who took over as CEO, has been steering the firm toward artificial-intelligence investments. Over recent months he allocated $6.8 billion to acquire homebuilder Taylor Morrison, $10 billion to Alphabet Inc. for AI-related projects, and $930 million to Italy’s Bending Spoons SpA, a technology-focused conglomerate. Analyst Meyer Shields of Keefe, Bruyette & Woods described the AI spending as a long-term bet on the technology’s potential.

At Berkshire’s railroad subsidiary BNSF, average revenue per car rose 10.5%, helped by higher fuel surcharge revenue, lifting unit profit by 19.3%. Berkshire Hathaway Energy posted an 8.3% earnings increase to $1.6 billion, driven by higher utility sales volumes and rate adjustments in certain territories.