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Breakfast News: Buffett Prefers Stocks To Cash

Motley Fool
24 Feb

Breakfast News: Buffett Prefers Stocks To Cash

February 24, 2025

Friday's Markets

S&P 500
6,013 (-1.71%)
Nasdaq
19,524 (-2.2%)
Dow
43,428 (-1.69%)
Bitcoin
$95,026 (-3.27%)

Source: Image created by JesterAI.

1. Berkshire Sets New Records

Berkshire Hathaway (BRK.B -0.64%) announced record operating earnings of $47.4 billion, in 2024 results posted Saturday. The gain was largely driven by Berkshire's insurance business, with underwriting income up around $2.6 billion year over year.

  • $334.2 billion in cash and equivalents: The market has focused on Berkshire's cash pile, which nearly doubled in the year. But Buffett assured shareholders "the great majority of your money remains in equities. That preference won't change."
  • "In 2024, Berkshire did better than I expected": Buffett said the successful year came "though 53% of our 189 operating businesses reported a decline in earnings." The stock is up 116% over 5 years, ahead of the S&P 500's 103% gain.

2. Key Q4 Reports This Week

Axon Enterprise (AXON -5.28%) posts fourth-quarter results after close Tuesday. The shares fell 25% last week after Northcoast Research lowered its rating (though is still beating the S&P 500 by 86% since the most recent of its multiple Rule Breakers recommendations, just four years ago).

  • Next-generation chip boost: Nvidia (NVDA -4.05%) reports on Q4 after Wednesday's closing bell, as the company had estimated "several billion dollars" in Blackwell AI chip revenue in the quarter, but recently sounded even more optimistic. Data center growth could be key.
  • Post-training is the "most important part of intelligence": Nvidia CEO Jensen Huang disputes claims that DeepSeek's low-cost pre-training means trillions in AI infrastructure spend won't be needed.

3. Next Up: Dividend Investor Earnings

Home Depot (HD -2.37%) will release fourth-quarter figures Tuesday. The DI recommendation faces another year of falling sales, after it met undemanding expectations in Q3.

  • A forecast yield of 2.3%: The housing market drives much of Home Depot's business, and that's still tough. But it's cyclical, and an ageing housing stock should mean rising spending on improvements.
  • "The Monthly Dividend Company": Known for providing monthly income, fellow Dividend Investor rec Realty Income (O 1.01%) also reports on Tuesday. After a Q3 revenue beat, the commercial real estate investment trust (REIT) raised its 2024 investment volume guidance to approximately $3.5 billion.

4. Other Notable Events to Watch

Wednesday brings a Q4 update from Salesforce (CRM -2.71%). The customer relationship management (CRM) specialist's digital assistant tools have helped boost net income 67% in the first three quarters.

  • Up only 47% in last five years: Autodesk (ADSK -2.07%) posts Q4 earnings Thursday, after a Q3 beat and a small raise in full-year outlook. The company pins growth potential on its new transaction model.
  • Eyes on inflation: January's Personal Consumption Expenditures (PCE) Price Index, due Friday, is expected to drop from 2.6% to 2.4% year over year. Core PCE – the Federal Reserve's favored inflation gauge, which excludes food and energy – is tipped to fall from 2.8% to 2.6%.

5. Hyperscalers Appraise AI Spend

Is Microsoft's (MSFT -1.90%) appetite for big AI spend starting to wane as Alibaba (BABA 5.72%) ramps up its ambitions?

  • Over capacity?: Analyst TD Cowan says Microsoft has started canceling leases for data center capacity in the U.S., totaling a capacity of "a couple of hundred megawatts." It claims the OpenAI backer is scaling back international plans.
  • Targeting international partnerships: Alibaba plans to invest more than $53 billion in AI infrastructure over the next three years, including data centers. It highlights the company's growing AI leadership ambitions.

6. Foolish Fun

Brookfield Corporation (NYSE:BN), Constellation Software (TSX:CSU), and Markel (NYSE:MKL) have all been described as "baby Berkshire Hathaways." Which are you backing to outperform the others in the long run, and why? Debate with friends and family, or become a member to hear what your fellow Fools are saying.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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