Berkshire hits record high as Nvidia sinks after Huang exit

Berkshire Hathaway ↗ 0.47% has become a refuge for investors leaving the artificial intelligence trade. Its shares set all-time highs on Thursday, Nov. 12, the same session in which Nvidia ↘ 4.34% fell to a 52-week low after Jensen Huang resigned as chief executive, Investor's Business Daily reported. Two of Berkshire's biggest holdings, Apple ↘ 0.21% and Coca-Cola The Coca-Cola Company ↘ 0.13%, also reached record highs that day, according to the same report.investors.com

Berkshire's Class B shares are up about 13% over the past month, while Nvidia is down 27% over the same stretch, Business Insider reported. It said investors have turned against AI stocks over worries about overinvestment and a possible regulatory crackdown.businessinsider.com

A rare gap over the market

The Kobeissi Letter, in an analysis cited by The Economic Times, found that Berkshire's Class B stock rose 13.2% in one month as the S&P 500 ↘ 0.33% fell 3.7%. That put Berkshire 19.2 percentage points ahead, its widest rolling one-month lead since 2010 and the fourth-largest in 30 years. The record lead was 29.6 points during the 2008 financial crisis. The turnaround is sharp because as recently as May, Berkshire trailed the index by 14.3 points.economictimes.indiatimes.com

The rally has come during Berkshire's first year without Warren Buffett as CEO. Greg Abel now runs the company. The Motley Fool, in commentary published by The Globe and Mail, said third-quarter operating profit fell 5.8% to about $12.7 billion, mostly because of weaker results at GEICO. The company still bought back a record $9.6 billion of its own stock in the quarter, and its cash pile grew to more than $377 billion.theglobeandmail.com

Nvidia's leadership crisis

Nvidia's board said Huang had stepped down as president, CEO and director "effective immediately." Chief Financial Officer Colette Kress will serve as interim CEO, and Harvey C. Jones becomes the company's first-ever board chair, according to Nvidia's announcement. The resignation came after reports that Huang had an affair with a woman US authorities suspect of spying for China, followed by a New York Times report of a second affair with a senior Nvidia executive who reported to him, Wired reported.investor.nvidia.com+1

CNN reported that Nvidia's stock is down 30.5% from its Oct. 6 record, a loss of about $1.76 trillion in market value. Three House committees have also called Huang in for a closed-door interview. Nvidia said it still plans to report fiscal third-quarter results on Nov. 17, according to CNBC.us.cnn.com+1

Buffett's words resurface

As the scandal spread, people online began quoting Buffett's old line that "it takes 20 years to build a reputation and five minutes to ruin it," along with Charlie Munger's warning about "liquor, ladies and leverage," Business Insider noted.businessinsider.com