Buffett warns of peak gambling mood as one-day options and prediction markets boom

Speculation in financial markets has never been more intense, Warren Buffett said Saturday, speaking at Berkshire Hathaway’s annual shareholder meeting in Omaha.

The billionaire singled out one-day options as pure gambling and pointed to a US soldier’s alleged use of classified military intelligence to profit on a prediction market as a sign of how far things have gone.

The Department of Justice is prosecuting the soldier, who allegedly pocketed $400,000 betting on a prediction market using non-public information about a military operation in Venezuela.

“There’s nobody who can explain why they’re buying an option for one day,” Buffett said, calling the volume of such activity “just incredible.”

Buffett drew a sharp line between traditional investing and what he sees as a growing casino culture. He said one-day options are best described as gambling, not investing or speculating.

While most market participants still operate on the right side of that divide, the other side has become increasingly hard to resist.

“The casino has gotten very attractive,” he said.

Berkshire’s cash mountain reaches $397 billion

Berkshire Hathaway reached a record $397 billion in cash during the first quarter of 2026 under new CEO Greg Abel, following $8.1 billion in net equity sales. Its net cash position stood at roughly $380 billion at quarter end.

Succeeding Buffett, Abel reintroduced share buybacks, exceeding $234 million. Still, Berkshire’s stock has struggled, dropping nearly 6% this year and trailing stock market performance since the leadership transition, per Yahoo Finance.

The ultimate conglomerate posted $10.1 billion in net earnings in the first quarter versus $4.6 billion in 2025, according to financial results released over the weekend. Operating earnings rose to $11.3 billion led by insurance underwriting and industrial units.

However, GAAP earnings were reduced by $1.2 billion in investment losses, mainly from changes in unrealized equity gains, though this was a marked improvement from a $5 billion loss in the prior-year quarter. Berkshire also recorded strong realized investment gains of $5.8 billion during the period.

Berkshire will deploy AI only where it adds value

Abel used his first annual shareholder meeting as chief executive to lay out a measured vision for Berkshire Hathaway, touching on artificial intelligence, capital allocation and the long-term shape of the conglomerate.

Speaking at “Woodstock for Capitalists,” Abel said Berkshire would take a disciplined approach to AI, insisting that any deployment must deliver tangible value to its businesses.

“We’re not going to do AI for the sake of AI,” he told shareholders. The firm is exploring applications across its railway and insurance operations but would not adopt the technology for trend’s sake.

Ajit Jain, Berkshire’s vice chairman of insurance operations, was more measured still, saying AI remains years away from handling complex underwriting or investment decisions, even as it shows promise in automating routine tasks.

Abel rules out breakup, flags narrow exceptions on divestitures

Abel moved to dispel any notion that Berkshire might shed parts of itself, reaffirming that the firm’s decentralized structure and ability to move capital efficiently across operations made breakups or divestitures unlikely.

He left a narrow exception, acknowledging that a sale could become necessary if a relationship deteriorated beyond repair due to labor or reputational issues.

Abel names core four holdings, takes more active portfolio role

On the portfolio, Abel described a concentrated equity strategy anchored by what he called the “core four,” including Apple, American Express, Coca-Cola and Moody’s, alongside Berkshire’s longstanding stakes in Japanese trading houses.

He said he would take a more active hand in managing positions while continuing to collaborate closely with Buffett on investment decisions.

Speaking with CNBC on the sidelines, Buffett said elevated asset prices were keeping Berkshire on the defensive, and that the firm would move decisively when conditions turned, when, as he put it, “nobody else will answer their phones.”

Consumer strain hits NetJets and Clayton

NetJets CEO Adam Johnson said high energy prices had begun to weigh on demand across some of Berkshire’s retail and consumer product businesses, though he said the units were built to manage through volatility.

Abel flagged similar pressure at Clayton Homes, where persistently high mortgage rates have dampened demand for manufactured housing.

Abel said the surge in data center construction presents a major growth opportunity for Berkshire’s utilities, projecting energy loads from hyperscalers could grow 50% or more over the next five years.

However, he was firm that large technology users must bear the full cost of the power they consume rather than passing it on to ordinary ratepayers.