Berkshire Hathaway: 3 Reasons I'm Not Buying The Stock

1. Valuation: A Premium for Scale, Not Necessarily Value

Berkshire Hathaway's current price-to-earnings (P/E) ratio of 17.13 as of September 2025 appears modest compared to its 10-year average of 20.56, according to FullRatio. However, this metric masks the company's structural challenges. With a market capitalization of $1.07 trillion-nearly four times that of its closest peer, Progressive ($144.63 billion)-Berkshire's scale has become a double-edged sword, as reported by CompaniesMarketCap. While its P/E is lower than tech giants like Walmart (37.64) and General Electric (38.62), it remains elevated relative to energy and industrial peers, per the same FullRatio analysis.

The company's valuation also reflects a premium for its brand and diversification, but this comes at the cost of limited growth potential. For context, Berkshire's 8.93% annual market cap growth rate since 2020 is impressive, yet sustaining such growth from a $1.07 trillion base is improbable, according to Macrotrends. Investors must ask: Is the stock priced for continued dominance, or is it merely a "legacy" play on Warren Buffett's legacy?

2. Operational Adaptability: A Barbell Strategy, But Missing the Middle

Berkshire Hathaway has made strides in adapting to the AI and renewable energy revolutions. Its subsidiaries, such as Berkshire Hathaway Energy (BHE), are investing in U.S. energy grids to support AI data centers, according to Enkiai, while partnerships with Zesty.ai and Abnormal Security highlight its foray into climate risk analytics and cybersecurity, as SWOTAnalysis highlights. However, these efforts remain fragmented and reactive.

The company's core strategy-a "barbell" approach of holding large stakes in tech giants like Apple ($71.9 billion) and Amazon, alongside infrastructure investments-lacks coherence in the AI era, as Monexa argues. While Apple's brand strength is undeniable, its slowing hardware growth (and Buffett's recent divestment of 635 million shares) suggests a misalignment with Abel's operational focus, according to Motley Fool. Meanwhile, Berkshire's indirect bets on quantum computing via Alphabet and Microsoft are speculative and underdeveloped compared to pure-play AI firms.

3. Succession Risk: A New Era, But at What Cost?

Greg Abel's ascension to CEO has introduced both optimism and uncertainty. While his operational expertise in energy and infrastructure is a strength, the market's initial 8.6% dip in BRK-B shares between May and June 2025 underscores lingering doubts, as the Monexa leadership piece notes. Abel's hands-on management style contrasts with Buffett's decentralized approach, raising questions about cultural continuity and decision-making speed, as Capwolf observes.

Moreover, Berkshire's leadership transition lacks the clarity of Buffett's long-term vision. Abel's focus on deploying $347.7 billion in cash reserves toward "high-growth sectors" is ambitious, but his track record in energy does not guarantee success in tech or AI, as a LinkedIn piece argues. The company's recent $68 million personal investment by Abel in Berkshire shares is a positive signal, according to BRK‑B commentary, yet it cannot offset the risks of a $1.07 trillion enterprise navigating a post-Buffett world.

Conclusion: A Legacy Stock, Not a Growth Play

Berkshire Hathaway remains a titan of American capitalism, but its current valuation, operational fragmentation, and succession uncertainties make it a less compelling buy for long-term investors. While its market cap and P/E ratio suggest value, the company's size and strategic ambiguity in tech sectors limit its upside. For those seeking innovation and agility, Berkshire's barbell strategy-and its reliance on legacy assets-may not justify the premium.