Warren Buffett’s Berkshire Hathaway is now a $1 trillion company. Inside the small and elite club of world's richest firms

Birthday celebrations have come early for American businessman, investor, and philanthropist, Warren Buffett — he turns 94 on August 30 — as his company, Berkshire Hathaway, reached a market capitalisation of $1 trillion on Wednesday.

On Wednesday (August 28), shares of the Omaha-based conglomerate rose as much as 0.8 per cent, pushing its market capitalisation above the trillion-dollar mark for the first time. For those who aren’t familiar with economic lingo, market capitalisation shows how much a company is worth as determined by the total market value of all outstanding shares.

“It’s a tribute to Mr Buffett and his management team, as ‘old economy’ businesses … are what built Berkshire. Yet, these businesses trade at relatively much lower valuations, versus tech companies which are not a major part of Berkshire’s business mix,” Andrew Kligerman, TD Cowen’s Berkshire analyst was quoted as saying to CNBC. “Moreover, Berkshire has achieved this through a conglomerate structure, a model that many view as ‘archaic,’ as corporations have increasingly moved to specialisation over the decades.”

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With this, Buffett has not only got an early birthday gift, but his company also joins the small elite club of companies that have cracked the $1 trillion threshold. Here’s what we know.

Rise and rise of Berkshire Hathaway

Berkshire Hathaway, an American holding company based in Omaha, traces its history back to two Massachusetts textile firms: Hathaway Manufacturing Company (incorporated in 1888) and Berkshire Cotton Manufacturing Company (incorporated in 1889). Berkshire Cotton became Berkshire Fine Spinning Associates in 1929 and merged with Hathaway to form Berkshire Hathaway, Inc, in 1955.

It was in 1965 that Warren Buffett and his investment firm bought enough shares to take full control of the textile company. In the following two years, Buffett took the company on a different path, into the insurance and investment sector.

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Along with his partner, Charlie Munger , who came aboard with Berkshire Hathaway in the 1970s, Buffett continued to focus on companies with stable, almost predictable long-term growth. As years rolled on, Berkshire continued making new investments in companies familiar and unfamiliar.

And today, the company owns sizable pieces of landmark companies such as American Express, The Coca-Cola Company, Bank of America and Apple, among many others. Other businesses include Geico car insurance, BNSF Railway, Berkshire Hathaway Energy, Brooks running shoes, Dairy Queen ice cream, Ginsu knives and the World Book encyclopaedia, among others.

On the day when it broke the $1 trillion barrier, the shares were up 0.8 per cent to $696,502.02 and according to reports, shares of the conglomerate have rallied more than 28 per cent in 2024. Its multiple businesses have generated $22.8 billion of profit in the year’s first half, up 26 per cent from a year earlier.

Kevin Heal, an analyst who covers the company for Argus Research, told New York Times that reaching a $1 trillion market valuation is “a big deal” and “goes to show the long-term performance” of Berkshire and Buffett.

Joining the $1 trillion club

With achieving the milestone on Wednesday, Buffett’s conglomerate joins the likes of Apple, Nvidia, Alphabet, Microsoft, Amazon, and Meta with its 13-figure market value. Elon Musk’s Tesla had previously crossed the $1 trillion threshold, but lost ground after a series of sales misses and other missteps.

This is significant as Berkshire Hathaway is the first nontechnology company in the US to score the coveted milestone.

It was in 2018 that Apple, the company behind devices such as the iMac and the iPhone, became the world’s first trillion-dollar public firm. This milestone was reached 42 years after Apple was founded and 117 years after US Steel became the first company to be valued at $1 billion in 1901.

In 2018, Amazon also joined the $1 trillion club. Three years later, in 2021, it joined Google-parent Alphabet, in reaching a $2 trillion valuation.

Interestingly, energy company PetroChina was cited as the world’s first trillion-dollar company in 2007, but the valuation was considered unreliable because only two per cent of the company was released for public trading.

Two years after Apple cracked the threshold, Google’s parent company, Alphabet, also hit the eye-popping number in January 2020.

In October 2021, Elon Musk’s Tesla became one of the few companies to crack the club. It was only the second fastest company to hit the $1 trillion mark, reaching it just more than 12 years after its 2010 initial public offering. However, the company dropped out of that elite club.

Just last year, Nvidia became a $1 trillion company thanks to the Artificial Intelligence (AI) boom. The chipmaker was founded in 1993 by Jensen Huang and two like-minded engineers at a Denny’s in the San Jose, California, area, initially focused on making computer graphics better. And 16 years after it was founded, Nvidia took a turn when Huang opened up the company’s chips for purposes beyond computer graphics.

Future of Berkshire Hathaway

While it is a big moment for Buffet t and his company, it’s also pertinent to understand the company’s future. Buffett has named his Berkshire vice chairman Greg Abel (61), to takes over as chief executive after him.

Buffett was quoted as saying, “Berkshire will function largely as it does today, regardless of who leads it. We have the right people in place — the right directors, managers and prospective successors to those managers.”

With inputs from agencies