Buffett’s on the Sidelines – Should You Follow?

Warren Buffett and Berkshire Hathaway (NYSE: BRK.A) always make headlines in February when the firm holds its annual meeting. Among the many takeaways is what the company has been buying and selling and how invested it is in the market. A critical detail from the 2025 meeting is that Berkshire Hathaway’s cash pile hit a record high, suggesting the Oracle of Omaha and his investment Colossus are on the sidelines. 

[content-module:CompanyOverview|NYSE:BRK.A]The cash pile didn’t just grow; Berkshire Hathaway’s cash pile ballooned by nearly 70%, rising by $134 billion to over $330 billion, more significant than the market cap of 94% of the S&P 500 (NYSEARCA: SPY). The cash build is due to massive sales in top names like Bank of America (NYSE: BAC), Apple (NASDAQ: AAPL), American Express (NYSE: AXP), and The Coca-Cola Company (NYSE: KO), suggesting they are overvalued and at risk of a significant correction. 

Holdings in BAC and AAPL were cut the hardest, trimmed by 25% and roughly 65%, respectively, but large portions of all positions were liquidated. Conversely, Mr. Buffet’s buying was not significant, falling short of $6 billion, suggesting there wasn’t much interesting other than Occidental Petroleum (NYSE: OXY). Berkshire’s holdings in that stock increased by double-digits during 2024, and additional buys were made in 2025. 

The Risk Is the FOMC, Inflation, and Donald Trump

The risk for the stock market is the impact of Donald Trump’s policies on an already-strained economic situation. His policies are expected to sustain higher-than-wanted inflation due to tariffs and increased domestic demand, likely keeping the FOMC from lowering interest rates. The question is if inflation will hold steady at its current pace or accelerate as it did in the second half of 2024. If inflation continues to accelerate, the FOMC must raise interest rates to combat inflation, which could easily tip the economy into a recession. 

Trump’s policies also include mass layoffs. The Department of Government Efficiency (DOGE) is cutting government jobs by the thousands and will impact the labor market generally. That is bad news for employment data and the consumer outlook, but it may have a silver lining. Reducing government jobs may offset Trump’s inflationary pressure enough to keep it from accelerating consumer-level inflation so that rate hikes come back onto the table. As it is, the CME FedWatch Tool indicates a 92% chance for one 25-basis point rate hike by year’s end and about 70% chance for two. 

Broadening Economic Activity and Earnings Growth Are the Opportunity

The opportunity for investors is that the United States will avoid recession, and Trump’s policies will not significantly accelerate inflation. The U.S. economy will remain strong, and corporate earnings will grow in this scenario, a bullish environment for stocks compounded by the expectation of broadening activity. Easing regulatory and tax hurdles are expected to bolster economic activity across sectors, leading to a broader rally in stocks, another good reason for Mr. Buffett to raise cash. In that light, Berkshire’s sales in 2024 were precautionary but also preparatory, raising capital for deployment into new investments. 

So, the S&P 500 is set up to fall but is not likely to fall far because the outlook for economic and earnings growth is dimming but still positive. A price correction in early 2025 may only fall as much as 5.5% from the all-time high, finding support at the January low, but there is a risk of a deeper correction because the forecasts could continue to decline. The critical support zone is 5,725 to 5,780; if broken, this market could retreat to 5,400 or deeper before hitting solid support. 

Catalysts for the market include tariff relief, easing inflation, and lower interest rates, but they are not likely to emerge until later in 2025. The S&P 500 could remain in a holding pattern until then, trending sideways within the established range. 

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AST SpaceMobile Stock Surges 17% After Analyst Upgrade

Shares of satellite-based cellular broadband services firm AST SpaceMobile Inc. (NASDAQ: ASTS) spiked by as much as almost 17% in morning trading on February 26, 2025, after analysts at Cantor Fitzgerald upgraded the company to a rating of Strong Buy the day prior and the firm announced its latest major contract.

Cantor is only the second Wall Street firm to re-evaluate its rating of ASTS shares so far in 2025, but it joins a number of other institutions that are already broadly optimistic about a company that has emerged as a top pick in the space race.

While investors have no doubt been enticed by Cantor's upgrade, there are many other compelling reasons why ASTS shares stand out among firms aiming to develop business in space—though it remains mostly in its pre-revenue phase, AST SpaceMobile has successfully completed a number of important operational steps that have allowed it to secure multiple critical contracts.

Further, the space market is largely untapped and fast-growing, with a number of firms like Redwire Corp. (NYSE: RDW) and Rocket Lab USA Inc. (NASDAQ: RKLB) aiming to shore up their positions in different niches. AST seems increasingly likely to have a significant role in providing satellite-based broadband to customers out of range of traditional service.

Satellite Launches and Contracts Fuel Analyst Interest

Though AST has not yet fully launched its operations, its share price rocketed upward by a massive 824% in the year leading to February 26, thanks in large part to a series of successful commercial satellite launches in September and October 2024. These developments give the company crucial infrastructure in place to begin providing intermittent service and prove that AST's technology is capable.

The company has also enjoyed numerous new contracts as its infrastructure has become increasingly robust. On February 26, and likely also contributing to the share price spike, AST announced that it had secured a $43-million subcontract on a U.S. Space Development Agency award. The company has already succeeded through a government contract involving its BlueWalker-3 satellite, launched in 2022. Though AST has not revealed many details around the terms of this latest contract agreement, it appears that it may be related to the company's direct-to-cell communications service and its capacity to support terrestrial missions under the Proliferated Warfighter Space Architecture program.

The presence of a second such agreement may signal that AST's capabilities extend further into the government space than previously anticipated, as the company has generally positioned itself as a commercial broadband services firm.

Telecom Partnerships Remain Promising

Besides a burgeoning partnership with the Space Force, AST also has numerous agreements in place with major telecommunications companies that should help to ensure its services are widely adopted as they continue to come online. As T-Mobile US Inc. (NASDAQ: TMUS) has launched its partnership with Elon Musk's Starlink, other 5G providers including Verizon Communications Inc. (NYSE: VZ) and AT&T Inc. (NYSE: T) have rushed to partner with AST. Vodafone also announced a major 10-year agreement with AST late in 2024 that should provide additional service in markets around the world.

More Infrastructure Build-Out to Come, But Risks Remain

A January authorization from the FCC gave AST the key go-ahead to begin testing its previously launched satellites on Verizon and AT&T networks. The company plans to launch a new batch of satellites, likely later in the quarter. If these steps go smoothly, AST will be closer to fully operational.

Investors may still want to keep a couple of things in mind before diving into an ASTS position. First, shares remain highly volatile; despite the bump on February 26, they remain down more than 6% in the five-day period leading to that day, for example. Further, short interest in ASTS stock is significant. As of February 26, short interest represents more than 42.7 million shares, an increase of a whopping 30.1% over the prior month. Whether AST SpaceMobile can continue to fly high or if the bearish investors may be correct in their hesitation remains to be seen.

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3 Stocks With Triple-Digit PEs That Are Still Worth a Look

The price-to-earnings (P/E) ratio is one of the most commonly used metrics to determine whether a stock is expensive or cheap. Generally, the higher the P/E ratio, the more expensive a stock is relative to its earnings. But in times of risk-on sentiment, investors tend to overlook sky-high P/E ratios, betting on growth potential and momentum instead.

However, when sentiment shifts more defensively, stocks with triple-digit P/Es often get hit the hardest. That’s exactly what’s happening right now with Palantir Technologies Inc (NASDAQ: PLTR), Tesla Inc (NASDAQ: TSLA), and Broadcom Inc (NASDAQ: AVGO). Each of these tech giants has a P/E well over 100 and is currently seeing a decent amount of selling pressure.

However, sometimes steep declines create attractive entry opportunities for those willing to bet on the long-term story. Let’s take a closer look at why each of these three stocks could be setting up for a bounce in March.

PLTR: A 30% Pullback But Still Holding February’s Gains

Palantir has had a wild ride this month. After hitting a record high earlier in February, the stock has since tumbled nearly 30%, giving back a large chunk of its recent gains.

Much of the selling pressure stems from concerns about potential U.S. defense spending cuts, which could impact Palantir’s government contracts. And with a P/E ratio of 480, the stock is undoubtedly one of the most expensive on the market.

However, it’s worth noting that Palantir crushed analyst expectations in its early February earnings report, proving that its business momentum remains strong. Additionally, analysts remain bullish, with Loop Capital issuing a Buy rating last week and a $141 price target, which points to a targeted upside of more than 50%. If sentiment stabilizes and buyers step back in, Palantir could quickly reclaim lost ground and push higher into March.

TSLA: A High-Priced Stock That’s Becoming Oversold

Tesla is no stranger to high valuations, but with a P/E of 162, it trades 27 times higher than Ford Motor Co (NYSE: F). Given that the stock has been selling off for many weeks now, this comparison clearly does not sit well with many investors.

Since peaking in December, Tesla has since fallen 30%, dragged down by a weak earnings report in late January that added to valuation concerns. When a stock already trades at a high multiple and then disappoints on earnings, Wall Street tends to react aggressively, which is exactly what we’re seeing now.

However, Tesla may be approaching a turning point. Its RSI reading is 32, which suggests the stock is nearing extremely oversold territory. If it drops just a bit further, it could soon trigger a technical bounce, if not a full recovery rally. For investors willing to look past the valuation concerns and focus on Tesla’s long-term growth story, this pullback could offer an attractive entry point before momentum shifts again.

AVGO: A 20% Pullback With a Big Catalyst Ahead

Broadcom's stock price has dropped nearly 20% since December’s high, including a sharp 10% decline over the past three sessions alone.

At a P/E of 161, Broadcom looks far more expensive than key semiconductor peers like NVIDIA Corp (NASDAQ: NVDA) with its P/E of 51, and Qualcomm Inc (NASDAQ: QCOM) with its P/E of 17, making it a prime target for valuation-based selling.

But there’s one major reason to keep an eye on Broadcom - its track record of delivering strong earnings. Next week’s Q1 earnings report could be a key catalyst that reverses the stock’s recent slide. Adding to the bullish case, Morgan Stanley recently issued an Overweight rating and a $246 price target, suggesting a nearly 20% upside from Monday’s closing price of $207.

If Broadcom delivers solid numbers next week, expect the stock to bounce sharply off its recent lows as investors refocus on its long-term strength rather than its high valuation.

Final Thoughts

Triple-digit P/E stocks are often the first to sell off when sentiment shifts defensive, but they can also be the first to bounce back once the dust settles.

Palantir’s recent pullback may be overdone, Tesla is nearing oversold conditions, and Broadcom has a major earnings catalyst ahead. For investors willing to weather the short-term volatility, these three stocks could be setting up for strong moves in March.

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