Berkshire Hathaway’s first-half 2026 profit more than doubled, but investment effects explain most of that increase. Earnings attributable to shareholders rose from $16.97 billion to $35.77 billion. Higher investment gains and the absence of last year’s Kraft Heinz impairment—a write-down of the investment’s accounting value—explain 81.2% of the increase, while operating cash flow grew 3.2%. For this insurance-led conglomerate, the distinction matters because gains from selling investments and changes in their market values do not measure the profitability of selling insurance or running its businesses. 10-Q, earnings discussion, p. 33
Throughout this report, H1 means the first six months of the year, $B means billions of dollars, and $M means millions.
1. Acquisitions Expanded Assets While Cash Declined
Berkshire’s asset growth included purchased businesses, so it cannot be read entirely as expansion within existing operations.
1-1. OxyChem Added Substantial Physical Assets
Read the cash decline alongside Treasury bills, which are short-term government investments reported separately.
| Item ($M) | Dec. 31, 2025 | June 30, 2026 | Change |
|---|---|---|---|
| Cash and cash equivalents | 51,877 | 40,609 | −21.7% |
| Separately reported Treasury bills | 321,434 | 324,905 | +1.1% |
| Receivables, excluding loans and finance receivables | 48,718 | 53,197 | +9.2% |
| Inventories | 24,424 | 26,575 | +8.8% |
| Property, plant and equipment | 216,625 | 225,224 | +4.0% |
| Intangible assets, excluding goodwill | 34,842 | 34,935 | +0.3% |
| Total assets | 1,222,176 | 1,263,071 | +3.3% |
Amounts combine the filing’s two business groupings where applicable; equipment held for lease is separate from property, plant and equipment. Changes are calculated from the reported balances. The much larger Treasury-bill balance changed little, providing context for the decline in cash alone. Balance sheets, p. 2
The $9.4B OxyChem acquisition included approximately $7.0B of property, plant and equipment at its preliminary acquisition value. It also brought receivables, inventories and intangible assets; the filing does not isolate its contribution to each closing balance. Intangible assets changed little on a net basis, but that balance also reflects amortization—the gradual recognition of their cost as an expense—and other movements. Notes 2 and 12, pp. 8 and 15
1-2. Debt Was Stable, but Obligations Sit in Different Businesses
Reported borrowings edged down from $129.08B to $128.60B. Insurance and other borrowings fell, while borrowings in the combined railroad, utilities and energy grouping rose. Berkshire does not guarantee debt issued by its BNSF railroad or Berkshire Hathaway Energy businesses. Groupwide liquidity therefore should not be assumed to back every subsidiary’s debt through a parent guarantee. Note 16, pp. 19–20
The quarterly debt tables disclose rates and maturity ranges, but not a consolidated percentage due within three years or one groupwide average interest rate. Operating lease liabilities are included in the balance sheet; this report does not separately quantify their total. Note 16 and contractual obligations, p. 49
1-3. Retained Profits Added More Equity Than Buybacks Removed
Total assets of $1,263.07B equal liabilities of $512.89B plus equity of $750.18B, including minority owners’ interests in subsidiaries. Retained earnings—accumulated accounting profits kept in the business—rose from $763.19B to $798.96B, while paid-in capital stayed near $35.62B.
Repurchased shares held in treasury increased the equity deduction from $78.94B to $83.70B; accumulated gains and losses recorded outside net income deteriorated from negative $2.45B to negative $2.97B. Equity grew mainly through retained accounting profits, which include investment valuation gains and are not the same as cash saved. Balance sheets and equity statements, pp. 3 and 6
2. The Profit Rebound Exceeded the Improvement in Business Earnings
Investment gains and the absence of the prior-year Kraft Heinz write-down explain most of the profit increase; even the remaining increase includes a substantial benefit from currency movements.
2-1. First-Half Profit Remained Below Its 2024 Level
The three-year comparison shows why the unusually weak 2025 profit base needs context.
| Item ($M, except ratios) | H1 2024 | H1 2025 | H1 2026 | Annualized change, 2024–26 |
|---|---|---|---|---|
| Revenue | 183,522 | 182,240 | 195,483 | +3.2% |
| GAAP pretax earnings | 53,843 | 19,898 | 44,382 | −9.2% |
| Consolidated net earnings | 43,330 | 17,129 | 35,951 | −8.9% |
| Net earnings attributable to shareholders | 43,050 | 16,973 | 35,773 | −8.8% |
| Shareholder net earnings / revenue | 23.5% | 9.3% | 18.3% | — |
| Operating cash flow / consolidated net earnings | 0.56× | 1.23× | 0.60× | — |
GAAP means generally accepted accounting principles, the rules used for these reported financial statements. Consolidated net earnings include profits attributable to minority owners of subsidiaries; shareholder earnings exclude those interests.
The annualized change is the compound yearly rate between the first-half 2024 and first-half 2026 amounts, not a full-year forecast. Berkshire does not present a single consolidated GAAP operating-profit subtotal; pretax earnings are not operating profit. Its net margin includes investment gains outside revenue and therefore is not a pure business margin. 2026 statements, pp. 4 and 7; 2025 statements, pp. 4 and 6
After-tax investment results improved from a $68M loss to an $11,444M gain. The prior-year $3,760M Kraft Heinz write-down did not recur. Together, these effects account for a calculated $15,272M of the $18,800M increase in shareholder profit. Earnings discussion, p. 33
Investment results include both gains realized when securities are sold and unrealized changes in the value of securities still held. Berkshire’s earnings release identifies approximately $7.5B of after-tax realized gains and $3.9B of unrealized gains in H1 2026. The investment contribution therefore was not solely a rise in the market value of unsold holdings. Second-quarter earnings release
Subtracting investment results and adding back the prior-year Kraft Heinz impairment produces $24,329M versus $20,801M, matching Berkshire’s reported non-GAAP operating earnings for these periods. That is a calculated increase of approximately 17.0%. This company-defined measure excludes specified investment and impairment effects from shareholder profit, but still includes currency effects and acquisition-related expenses. It should not be treated as a measure of recurring operating profit. Second-quarter earnings release; Earnings discussion, p. 33
Average equivalent Class A shares—the share count after expressing both share classes on a common basis—declined from 1,438,223 to 1,437,279. That added only about 0.07% to earnings per share relative to an unchanged share count; profit growth drove almost all the increase. The repurchased shares are reported as treasury stock. Earnings statement and Note 18
2-2. Currency Gains Lifted Operating Earnings and Reduced Reported Overhead
Currency movements on foreign-denominated debt produced a $745M pretax gain, versus approximately $2.1B of losses a year earlier. These amounts run through selling, general and administrative expenses, so lower reported overhead does not necessarily mean the businesses became cheaper to run. Note 16, p. 19
After tax, the currency result swung from a $1.59B loss to a $575M gain. That approximately $2.17B improvement accounts for about 61% of the $3.53B increase in Berkshire’s reported operating earnings, calculated from the earnings release. Currency movements therefore explain a substantial part of the improvement even after investment gains and the Kraft Heinz write-down are excluded. Second-quarter earnings release
A consolidated split between costs that stay relatively fixed and those that vary with sales is not disclosed. A groupwide estimate of how sales growth translates into profit growth would obscure these effects.
3. Capital Spending Absorbed More of Operating Cash
Cash remaining after purchases of physical assets declined despite higher net cash from operations.
Compare operating cash with asset spending before interpreting the large investing outflow.
| Item ($M) | H1 2025 | H1 2026 | Change ($M) |
|---|---|---|---|
| Operating cash flow | 20,988 | 21,653 | +665 |
| Investing cash flow | 32,957 | −28,644 | −61,601 |
| Financing cash flow | −1,113 | −4,109 | −2,996 |
| Ending cash, including restricted cash | 101,228 | 41,360 | −59,868 |
| Property and leased-equipment purchases | 9,139 | 10,631 | +1,492 |
| Operating cash less those purchases | 11,849 | 11,022 | −827 |
Ending cash compares the two June dates and excludes separately reported Treasury bills. Restricted cash is cash whose use is limited. The final row is a calculated measure of cash after physical-asset purchases, not freely distributable insurance cash. Cash-flow statement, p. 7
The cash-to-profit ratio fell to 0.60× from 1.23×: operating activities generated about 60 cents per dollar of consolidated net earnings, compared with $1.23 a year earlier. This alone does not indicate deteriorating earnings quality.
To reconcile accounting profit with operating cash flow, the statement subtracts $14.47B of investment gains and $6.12B of investment discount accretion, which is income recognized as securities bought below repayment value approach maturity. Investment sale proceeds appear in investing cash flow, while unrealized gains do not generate cash. The statement adds back $7.12B of depreciation and amortization, expenses that allocate asset costs without a matching current-period cash payment. Receivables and originated loans absorbed $5.41B, while other assets absorbed $2.62B. These are selected reconciling items, not the complete bridge from profit to operating cash flow. Cash-flow statement, p. 7
Physical-asset spending equaled 5.4% of revenue, calculated as $10,631M divided by $195,483M. BNSF and Berkshire Hathaway Energy accounted for about $6.7B of that spending. The filing does not separate spending to maintain existing operations from spending to expand them; depreciation cannot supply that split. Capital expenditure discussion, p. 49
Cash buybacks consumed $4.44B, while acquisitions used $9.70B and stock purchases exceeded stock sales by $11.63B. Reported equity records $4.76B of repurchases, a different measure from cash paid during the period. The financing statement reports no parent shareholder dividend payment, and aggregate borrowings did not increase to match these uses. Cash-flow and equity statements, pp. 6–7
4. GEICO’s Insurance Margin Narrowed Despite a Quiet Catastrophe Period
Insurance profitability weakened in an important business even as other operations improved.
GEICO’s combined ratio—the share of premium revenue consumed by claims and underwriting expenses—rose from 81.7% to 89.3% in the first half. A higher ratio leaves less premium revenue as underwriting profit. Its pretax underwriting profit fell from $3,994M to $2,410M as claims became more frequent and costly, and commissions and advertising increased. In Q2 alone, the ratio worsened from 83.5% to 91.2%. GEICO remained profitable on underwriting, but with a narrower margin. GEICO results, pp. 34–35
Across Berkshire’s property and casualty insurance and reinsurance businesses, no catastrophe event exceeded the filing’s $150M loss threshold in H1 2026, compared with $1.1B of losses from Southern California wildfires in H1 2025. Berkshire also lowered estimates of the ultimate cost of prior years’ claims by approximately $1.5B, versus $240M a year earlier, reducing current-period claims expense. These groupwide benefits help explain why insurance results cannot be read solely as a measure of current policy pricing and claims experience; they should not all be attributed to GEICO. Note 13, p. 16
Insurance float, money held pending payment of insurance obligations, reached approximately $177.5B. Underwriting remained profitable overall, but after-tax insurance investment earnings fell from $6,260M to $5,738M as short-term interest rates declined. More investable funds do not guarantee more investment income. Insurance investment income, p. 38
Outside insurance, first-half after-tax BNSF earnings rose from $2,680M to $2,935M, supported by volume and efficiency improvements. Manufacturing, service and retailing earnings rose from $6,661M to $7,669M. Berkshire contains businesses facing different demand conditions; these results do not establish that all its businesses are at the same point in an economic cycle. Earnings discussion, p. 33
PacifiCorp’s estimated unpaid wildfire liabilities fell to $572M from approximately $1.2B, with $589M of settlements paid during the half. The lower balance does not establish that legal exposure has ended. Material additional losses remain reasonably possible, no specific additional loss range can be estimated, and no further insurance recoveries are expected. Note 22, pp. 25–26
5. Capital Deployment Increased, but Returns Still Need to Follow
Berkshire put more money into businesses, securities and its own shares, while investment gains and the absence of the prior-year Kraft Heinz write-down accounted for most of the reported profit increase. Currency movements also contributed substantially to the rise in its reported operating earnings. OxyChem entered the accounts during the half; the approximately $6.8B Taylor Morrison acquisition closed in July and is outside the first-half acquisition cash outflow. Those transactions expand exposure to chemicals and housing without yet establishing their long-term returns. Note 2, p. 8; Second-quarter earnings release
The next test is whether business earnings and cash generation justify that deployment. Better insurance pricing relative to claims costs would help GEICO, while lower interest rates could continue to pressure insurance investment income. Berkshire retains substantial liquidity, but acquisitions, infrastructure spending and unresolved wildfire claims all compete for future cash.
Sources: SEC Form 10-Q filing record, filed August 10, 2026, for the quarter ended June 30, 2026; accession 0001193125-26-341032. Historical comparisons use the Q2 2025 report. Berkshire’s August 8, 2026 earnings release supplies its non-GAAP operating-earnings reconciliation and after-tax currency effects.
This analysis is based on filings submitted to the U.S. Securities and Exchange Commission and is provided for informational purposes only. It is not investment advice.