Buffett’s Favorite Warning Signal Just Hit an All-Time High — and Berkshire Is Sitting on $397 Billion

TLDR

The Buffett Indicator has hit a record 232.5%, its highest level ever recorded, signaling stocks may be overvalued Berkshire Hathaway ended Q1 2026 with $397 billion in cash, up from $373 billion at end of 2025 Berkshire was a net seller of stocks in Q1, offloading $8.1 billion more in equities than it bought New CEO Greg Abel invested $10 billion in Alphabet in June, making it one of Berkshire’s top four holdings Goldman Sachs research shows trading in high-valuation stocks is near a decades-high, last seen in 2000

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Warren Buffett’s favorite stock market valuation tool has hit a record high, and Berkshire Hathaway’s cash pile has followed it upward. Together, the two data points are raising questions about where stock prices go from here.

JUST IN: Warren Buffett Indicator just hit an all-time high, signaling the stock market is "significantly overvalued." pic.twitter.com/KYDvlfiTqg

— Coinvo (@Coinvo) June 10, 2026

The Buffett Indicator — which divides the total market cap of US stocks by annual GDP — now stands at about 232.5%. That is the highest reading in records going back to 1970, according to data from GuruFocus.

Buffett himself has said that when the indicator approaches 200%, investors are “playing with fire.” The current reading is roughly two standard deviations above the long-term trend, according to Advisor Perspectives.

For context, Buffett has said a reading in the 70%-80% range is where “buying stocks is likely to work very well for you.” The current level is nearly three times that.

Berkshire Keeps Building Cash

Berkshire Hathaway ended the first quarter of 2026 with approximately $397 billion in cash, cash equivalents, and short-term Treasury bills. That figure rose from $373 billion at the close of 2025, meaning the company added about $24 billion to its reserves in just three months.

The company was also a net seller of equities during the quarter. Berkshire offloaded $8.1 billion more in stocks than it purchased, according to Bloomberg.

That cash position now exceeds the combined liquid reserves of Apple, Amazon, Alphabet, and Microsoft.

When markets dipped roughly 9% from January highs earlier this year, many investors expected Buffett to deploy some of that cash. He did not.

“This is nothing to make you get excited,” Buffett told CNBC, comparing the recent pullback to three past occasions where Berkshire’s stock fell more than 50%.

The S&P 500 currently trades at a forward price-to-earnings ratio of about 21, well above the long-run historical average of around 16, according to FactSet.

Goldman Sachs strategist Ben Snider noted that trading in stocks with high enterprise value-to-sales multiples is near a decades-high, last exceeded in 2000.

Greg Abel Takes a Different Approach

While Buffett stepped back from buying, new Berkshire CEO Greg Abel moved in a different direction. Abel took over from Buffett at the end of 2025.

In June 2026, Berkshire agreed to invest $10 billion in Alphabet through a private placement — $5 billion in Class A shares at around $352 each and $5 billion in Class C shares at about $348 each.

That deal came on top of roughly $11 billion Abel had already put into Alphabet during Q1. Berkshire’s total commitment to Alphabet now stands at around $26.6 billion, with the stake valued at approximately $32 billion at current prices.

The Alphabet investment is part of an $84.7 billion fundraise aimed at financing artificial intelligence infrastructure, according to CNBC.

Alphabet now ranks alongside Apple, American Express, and Coca-Cola as one of Berkshire’s four largest stock holdings.

Abel’s first quarter running Berkshire also produced operating earnings of $11.35 billion, up nearly 18% year over year. Net income more than doubled to $10.1 billion from $4.6 billion in Q1 2025.

Abel authorized $234 million in share repurchases in March — the first buyback activity since May 2024.

Berkshire’s short-term Treasury bills are currently earning just under 4%, with the 3-month yield at 3.72% as of early June.

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