Buffett warns of high gambling sentiment due to the rise of one-day options and prediction markets

Speculation in financial markets has never been more powerful, Warren Buffett said Saturday, speaking at Berkshire Hathaway's annual shareholders meeting in Omaha.

The billionaire described one-day options as pure gambling and pointed out how far things have gone since a US soldier tried to profit on the prediction market using classified military information.

The Justice Department is suing the military for pocketing a $400,000 bet on a prediction market using classified information about the military campaign in Venezuela.

“No one can explain why they would buy a one-day option,” Buffett said, adding that the scale of such activity is “amazing.”

Buffett draws a sharp line between what he sees as traditional investing and a growing casino culture. 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 more difficult to deal with.

“The casino got very attractive,” he said.

Berkshire's money mountain has reached 397 billion dollars

Berkshire Hathaway has reached a record $397 billion in cash under new CEO Greg Abel following a net equity sale of $8.1 billion in the first quarter of 2026. Net cash stood at $380 billion at the end of the quarter.

Buffett's successor, Abel, reintroduced a stock buyback of more than $234 million. Still, Berkshire stock has struggled, down nearly 6% this year and following the stock market's underperformance since the leadership transition, according to Yahoo Finance.

Financial results released over the weekend showed that last Congress posted net income of $10.1 billion in the first quarter, with $4.6 billion in 2025. Operating income increased to $11.3 billion, led by the insurance book and industrial segments.

However, GAAP income was reduced by a $1.2 billion investment loss, primarily due to changes in unrealized equity gains, although this was a significant improvement from the $5 billion loss in the previous quarter. Berkshire posted strong investment gains of $5.8 billion during the period.

Berkshire deploys AI only where it adds value.

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

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

“We don't do AI for AI's sake,” he told shareholders. The company is exploring applications in its railroads and insurance operations, but won't use the technology for trends.

Ajit Jain, Berkshire's vice chairman of insurance operations, is even more measured, saying AI is still years away from handling complex bookkeeping or investment decisions, although it shows promise in automating routine tasks.

Abel avoids separation, flagging different situations.

Abel moved to dispel any suggestion that Berkshire could liquidate its own units, asserting that the company's decentralized structure and ability to efficiently mobilize capital are unlikely to break up or deteriorate.

It leaves a narrow exception, believing that a sale may be necessary if the relationship is damaged beyond repair because of labor or reputation.

Abel named the main four holdings, taking a more active portfolio role

Across the portfolio, Abel has outlined a concentrated equity strategy based on what he calls the “core four,” including Apple, American Express, Coca-Cola and Moody's, alongside Berkshire's long holdings in Japanese stocks.

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

Speaking to CNBC, Buffett said higher asset prices are keeping Berkshire on the defensive and that the company will act decisively when conditions change, as he put it, “Nobody else is answering their phones.”

Consumer pressure hits NetJets and Clayton.

NetJet CEO Adam Johnson said the units were built to manage flexibility, but high energy costs were starting to weigh on demand in some of Berkshire's retail and consumer products businesses.

Abel showed 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 huge growth opportunity for Berkshire Utilities, where power loads from hyperscalers could grow 50% or more over the next five years.

However, he was adamant that large technology users should bear the full cost of the energy they use instead of passing it on to regular ratepayers.