Why Wall Street is selling chip stocks and buying Berkshire: Is Buffett’s old-school stock the new hedge against the AI trade, or an early warning for markets?

For three weeks, Wall Street sold one of the market’s hottest trades and bought one of its oldest. Chip stocks fell about 15 per cent. Warren Buffett’s Berkshire Hathaway rose about 7 per cent.

Between October 2 and October 20, the iShares Semiconductor ETF (SOXX) lost 15.1 per cent, while Berkshire’s Class B shares (BRK-B) gained 7.4 per cent, according to Yahoo Finance.

On Tuesday, BRK-B closed at a record high for the first time since May 2, 2025, the day before Buffett said Greg Abel would take over as CEO.


On Wednesday, both the Class B and Class A (BRK-A) shares touched new intraday records.

Berkshire hits a record as chip stocks slump 15%: the rare dot-com-era signal investors are watching, and what it may mean for your portfolio

The wait was long. In those 17 months, the S&P 500 gained more than 35 per cent, and Berkshire only now got back to a record close.

The recent moves have been strikingly one-sided. From October 6 to Tuesday, SOXX fell in 10 of 11 sessions, and Berkshire rose on nine of those days.

On the chip sector’s two worst days, October 14 and October 16, Berkshire posted two of its best gains of the run. Since October 1, the stock has mostly gone up on days when chips went down.

For now, that makes Berkshire look like a hedge against the AI chip trade.

Berkshire is on track to rise in 14 of its last 15 sessions. It also strung together a 10-day winning streak, its first since 2018.

The gap between the two is historic too. Over the 12 sessions from October 2 through Tuesday, Berkshire beat SOXX by 22 percentage points.

Yahoo Finance compared Berkshire with the PHLX Semiconductor Index going back to 1994, and found this is the widest 12-session gap since early 2010. The all-time record, set in April 2000, was close to 40 points.

The gap alone is not the rarest part. The combination is. Chips fell at least 14 per cent while Berkshire gained at least 7 per cent over 12 sessions. Before this month, that last happened on October 3, 2001. Every earlier case came in 1995-96 or in 2000-01, when the dot-com bubble was bursting.

History gives a mixed message from here. In the short term, chips bounced back. They were higher a week later in five of the six earlier cases, and they are rebounding on Wednesday as well. A year later, the picture was weaker: chips were lower in five of six cases, and the S&P 500 fell in four.

Under Abel, Berkshire is also using its cash differently. It bought back about $4.5 billion of its own stock in the second quarter. That ended 14 straight quarters in which it sold more of its own stock than it bought, and its cash pile has come down from a record $397 billion.

Buffett said on September 18 that he would step down as chairman too. The stock hit its low about two weeks later.

The tech bets are changing as well. A few years ago, Apple made up nearly 45 per cent of Berkshire’s invested assets. Buffett was never known as a tech investor. What drew him to Apple was customer loyalty and people’s willingness to pay premium prices for iPhones, Macs and iPads, not the technology itself.

In just a few months, Alphabet has become for Abel what Apple was for Buffett. Google handled roughly 90 per cent of global internet search traffic in September, which is part of the appeal. But the AI ambitions are what interest both men most. Since Alphabet added generative AI and large language models to Google Cloud, the world’s third-largest cloud platform, sales in that high-margin business have grown very fast.

Abel is also looking beyond Alphabet. An October 14 filing with the US Securities and Exchange Commission shows Berkshire is buying 10 million shares of Bending Spoons in a private placement at $33 a share, an investment of $330 million. It follows a $600 million investment at the company’s IPO in July.

The company’s model has some similarity to Berkshire’s own. Berkshire grew to a $1 trillion market value by buying about five dozen companies, and pieces of others, and usually holding them for a long time.

Bending Spoons, based in Italy, buys technology platforms and uses software, AI, price hikes and layoffs to make them leaner and to sell more subscriptions. So far it has bought AOL, Vimeo, Brightcove, Eventbrite and WeTransfer, among others. The company is already profitable and growing quickly.

The next test comes with Berkshire’s third-quarter results, expected on Saturday, November 7.