Buffett Spent 60 Years Ignoring Tech and the Bill Is Coming Due

Key Points

• Warren Buffett's Berkshire Hathaway has underperformed the S&P 500 by roughly 39 percentage points over the past year, raising questions about whether value investing can keep pace with the AI-driven market.
• Berkshire is holding close to $347 billion in cash—nearly 40% of its market cap—a signal that management is bracing for a potential market correction rather than chasing current highs.
• James Early of Curia Financial argues Constellation Software is the most "Buffett-like" way to play an overblown SaaS selloff driven by AI fears.

The stock market is hitting new all-time highs, and Berkshire Hathaway is building a cash fortress. That tension tells investors something important about where we are in this cycle.

James Early, founder of Curia Financial and a longtime Buffett follower, attended the Berkshire Hathaway annual meeting in Omaha earlier this month. What he saw left him more willing to trim his position than add to it.

Berkshire's Cash Pile Is Sending a Signal

Berkshire Hathaway NYSE: BRK.B is sitting on roughly $347 billion in cash—nearly 40% of its total market cap.

The company did repurchase about $200 million of its own stock last quarter, but that's a rounding error against a cash hoard that size.

Meanwhile, Greg Abel, who took over as CEO three months ago, is running his first annual meeting at the helm of one of the world's most closely watched companies.

Early describes Abel as solid but not electric. "You can't replace the irreplaceable," he says of Buffett and the late Charlie Munger.

But the more pressing question isn't who's running the meeting; it's why so much cash is sitting idle while the market keeps climbing.

Buffett offered one telling frame at the meeting: the market is always a mix of church and casino, and lately the casino side has been getting more traffic. That's not a forecast—it's a posture. And Berkshire's actions back it up.

The Underperformance Gap Is Real—and the Reason Matters

Over the past decade, BRK.B has trailed the S&P 500 by roughly 2.6 percentage points annualized. Over the past year alone, that gap has blown out to approximately 39 percentage points. That's not noise. It's a story.

Early's answer is blunt: the Magnificent Seven.

The market has applied roughly double the earnings multiple to mega-cap tech compared to the rest of the S&P. And not because earnings growth has been dramatically different, but because investors are pricing in dramatically higher expectations.

Berkshire, with its railroads, insurance companies, and energy holdings, isn't in that trade.

The historical parallel is uncomfortable but instructive. In 1999, Buffett looked just as lost. Headlines declared he'd lost his edge. Then the dot-com bubble burst, and he was vindicated within 18 months. He's made this move before: hold cash, wait for blood in the streets, acquire on the way down.

The question Early can't answer with certainty is whether the same playbook works in 2025.

AI Is Where Berkshire Is Most Exposed

The technology gap inside Berkshire's private portfolio is clearer than most investors realize.

Greg Abel acknowledged at the meeting that Burlington Northern Santa Fe is roughly a decade behind Union Pacific NYSE: UNP in technology adoption. GEICO faces a similar story against Progressive NYSE: PGR, which was among the first insurers to sell policies online in the late 1990s and has never looked back.

Early's rough read of Abel's remarks: about 80% of his AI commentary focused on risk, not opportunity. That's not a company leaning into the moment. It's one watching it go by.

On the public equity side, Berkshire has made progress. Apple NASDAQ: AAPL became its single biggest return driver, and the portfolio has added Alphabet NASDAQ: GOOGL and Amazon NASDAQ: AMZN in recent years. But those moves came from portfolio managers Todd Combs and Ted Weschler, not from Buffett himself—and Combs has since departed.

The Contrarian Case for Constellation Software

Early isn't abandoning value investing. He's updating it. His current conviction pick is Constellation Software OTCMKTS: CNSWF, a company he describes as "the most Buffett-like way to play the SaaS selloff."

Founded by Mark Leonard, Constellation has quietly acquired between 500 and 1,000 vertical market software companies over its history—small, niche businesses with long-term contracts, founder-led cultures, and high customer retention. Leonard recently stepped back from day-to-day operations for health reasons, with Mark Miller now serving as president.

The stock has been hammered on AI fears: the assumption that large language models will simply replace the specialized software these companies provide. Early thinks that logic is overdone.

Even if AI replicates 90% to 95% of what a vertically integrated software company does, the 5% it misses could create catastrophic risk for the businesses relying on it. Those aren't relationships you rip out for a vibe-coded alternative.

That risk/reward setup—quality software assets priced for an AI apocalypse that probably isn't coming—is exactly the kind of misvaluation Buffett has always hunted. The difference? Investing in Constellation is hunting it in technology rather than avoiding technology altogether.

What This Market Moment Is Really About

Early draws an analogy to the early internet era: companies that dismissed websites in 2000 look absurd in retrospect. AI may carry even more long-term weight. The hype cycle will correct—it always does—but the underlying transformation is likely underestimated over any decade-long horizon.

The risk for Berkshire isn't just underperformance. It's that railroads could be disrupted by autonomous trucking. That insurers without AI-driven underwriting lose ground permanently. That holding cash while waiting for a crash means missing the compounding that's already happening elsewhere.

Early still holds his Berkshire shares; he's just not adding. And for what it's worth, he's thinking harder about Consellation Software instead.

The market will eventually sort out what's priced right and what isn't. The setup worth watching: whether Berkshire's cash pile becomes a weapon—or just a record.