Worried About That Next Big Market Correction? Why Berkshire Hathaway Shares Might Still Be a Smart Bet

With Warren Buffett releasing his last Thanksgiving letter to shareholders as CEO, many investors are likely feeling uncertain, maybe even a bit sad, as Berkshire Hathaway (NYSE:BRK-B | BRK-B Price Prediction) enters a new era. Undoubtedly, for big believers of the great Oracle of Omaha, it’s probably best to stay confident in incoming CEO Greg Abel. After all, he’s a man who’s been trained by the Oracle himself for quite a while now. If you believe in Buffett, shareholders should also believe in Abel and Buffett’s many stellar colleagues.

In any case, as Buffett looks to “go quiet,” there’s no doubt that a new generation of self-guided investors stands to miss out on invaluable wisdom. Of course, there are older materials to go by, but, in any case, questions linger as to how Berkshire will fare in the post-Buffett era as it retains a record cash hoard (as well as U.S. Treasury Bills) and a supposed lack of deals attractive enough to warrant putting a big enough chunk of it to work.

Berkshire Under Abel May Have an Easier Time Navigating an AI-driven Downturn

Of course, it will be interesting to see how Abel invests once he’s the man in charge come January. In any case, I think standing (mostly) on the sidelines from the AI run-up could be a good thing for those investors who are worried about the downside risks come the next big AI correction, which, in my opinion, has a high chance of happening in the next three years.

While Buffett will no longer be CEO, he will still chime in whenever spectacular events (a bear market, perhaps?) do occur.

So, with that in mind, I think Berkshire shouldn’t lose 100% of its Buffett premium (perhaps 75% of it could make more sense), especially if markets gravitate lower and some better pitches are thrown into what Buffett put as a “strike zone.” In any case, I think Berkshire might actually be a better bet than bonds, given the current slate of valuations and how the Fed isn’t guaranteed to cut rates come December.

Berkshire Hathaway Still Stands to Benefit From AI in the Long Term

With AI bubble and market overvaluation fears gripping the broad stock market as it moves towards new highs, it’s hard to tell if Berkshire really does stand to miss out on this great AI-driven rally.

Either way, Berkshire still stands to gain in other areas as AI technology continues to advance. Notably, Berkshire still holds shares of Apple (NASDAQ:AAPL), which has a massively underrated AI strategy going for 2026 (Siri update and other AI features). Additionally, let’s not forget about AI’s applications in industries such as insurance, railways, retail, and more.

Arguably, GEICO and BNSF (Burlington Northern Santa Fe) might be able to feast on AI-induced margin gains without having to sink considerable sums into AI capital expenditures as some of the big-tech titans are doing right now. As the technology proves itself to be a value creator, I do believe that it’s a mistake to deem Berkshire Hathaway as missing the boat on the fourth industrial revolution.

Indeed, whenever you can eat at the AI buffet without having to pay as high a price for admission, that’s a good thing, even though it’ll take some years before AI gains spread more broadly from tech to other corners of the market.

Personally, I think insurance, railways, and consumer gadgets, via the Apple investment, make Berkshire Hathaway a more prudent and less obvious longer-term AI winner with potentially less downside in the face of a big AI correction that may occur within the next year or so.

In the meantime, Berkshire Hathaway Energy appears well-positioned to capitalize on some of the AI upside (rising energy demand from data centers) without as much risk of being penalized if there is a correction that will probably disproportionately affect hyperscalers and semiconductor firms.

Berkshire Hathaway: More Enticing than Bonds, Even If It’s Not Buying Back Stock

Either way, I’d much rather own Berkshire Hathaway shares over bonds, given its less obvious AI upside and the hoard of cash that it could put to work once valuations contract, perhaps after the next market-wide growth scare. Of course, there’s always the chance that Berkshire Hathaway shares will have a rough ride if the next market-wide pullback is particularly severe.