S&P 500 Hits Record High as Buffett Warns of Market Speculation

• S&P 500 hits record 7,272 as earnings growth and AI stocks drive broad market strength.
• Buffett warns of rising speculation as valuations near dot-com levels and betting activity surges.
• Berkshire holds nearly $400B in cash, avoiding pricey assets and waiting for better entry points.

The S&P 500 pushed to a new high of $7,272, closing at 7,259.22 after a 0.81% daily gain, while the Nasdaq hit 25,326.13 and the Dow reached 49,298.25. The rally is driven by strong earnings, AI-led momentum, and easing geopolitical risk after a US-Iran ceasefire.

At the same time, Warren Buffett has warned that markets are entering a dangerous phase. He stated that investors are in a “gambling mood” and that many asset prices could look irrational at current levels.

Market Rally Driven by Earnings and AI

The latest move is backed by strong corporate performance. S&P 500 companies are on track for 28% year-over-year earnings growth in Q1, the strongest since 2021.

Chip stocks are leading the move. The PHLX semiconductor index is up 55% in 2026, with Intel rising 13% on reports of Apple using its chip services, while AMD is gaining ahead of earnings on expectations of 33% revenue growth. 

All 11 sectors in the S&P 500 moved higher, with materials and technology leading gains. The index also recorded 43 new highs in the latest session.

Buffett Signals Valuation Risk

Buffett pointed to near-record levels in the S&P 500 Shiller CAPE ratio, placing current valuations close to levels seen during the dot-com bubble.

He warned that speculation is spreading across markets, from one-day options to prediction markets and sports betting. US sports betting reached $167 billion in 2025, up 11% year-over-year, while prediction markets processed $25.7 billion in March 2026 alone, nearly 13 times higher than a year earlier.

This environment reflects rising risk appetite across asset classes, not just equities.

Berkshire Builds Record Cash Position

Meanwhile, Berkshire Hathaway is not chasing the rally. The company held nearly $400 billion in cash and short-term Treasurys at the end of Q1 2026.

Both Buffett and new CEO Greg Abel have avoided deploying capital at current valuations. The firm has passed on deals it considers too expensive, choosing to wait for better entry points.

This cash position serves two roles, i.e., protection during downturns and the ability to deploy aggressively when markets correct.

While the S&P 500 has rallied 27.92% over the past 12 months, Berkshire Hathaway stock has declined. Class A shares fell 6.76% to $717,886, and Class B shares dropped 6.59% to $478.41.

The gap shows a shift in investor preference toward growth and risk assets. Since Buffett announced his retirement in 2025, Berkshire has underperformed the S&P 500 by roughly 37%.

Over a five-year period, Berkshire still gained 64.57%, but the S&P 500 outpaced it with a 70.77% return.

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