Berkshire Hathaway Outperformed the S&P 500 Over a 60-Year Period Under Warren Buffett. Here's the Stock That Could Help Continue the Streak Under Greg Abel.

Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB) shares have risen by 236% over the past decade (as of Sept. 2). Critics are quick to point out that this performance came in lower than the total return of the S&P 500 index. It's easy to question the conglomerate's capital allocation decisions.

However, over the past six decades, Berkshire Hathaway's stock price has compounded at an annualized rate of 19.7%. This trounces the S&P 500 index's 10.5% average annual total return. The company's long-term track record is so extraordinary that even if the Omaha firm's shares fell by 99% tomorrow, they still would have beaten the benchmark over the trailing-60-year period.

Warren Buffett deserves all the praise. His successor, Greg Abel, is now tasked with directing capital allocation decisions for the massive $1.1 trillion enterprise. Investors hope that Berkshire Hathaway shares will outperform the S&P 500 index in the coming decades.

Here's the one stock that could help continue the streak under the new CEO.

Image source: The Motley Fool.

Apple remains Berkshire Hathaway's largest public equity holding

Berkshire Hathaway first purchased Apple shares in the first quarter of 2016. Since the start of that year, the consumer technology giant's shares have climbed an astonishing 1,140%. At one point, this single business represented about half of the conglomerate's entire portfolio. Apple might just be the single-most successful investment Warren Buffett made based purely in terms of dollar-figure gains.

Starting in late 2023, the Apple holding has been trimmed considerably. But it remains the biggest position, accounting for more than 20% of Berkshire Hathaway's portfolio, which is currently valued at $73.8 billion. Based strictly on this size, Apple is the one holding that can actually have the most notable impact on Greg Abel's ability to beat the market.

The valuation can definitely be a concerning factor. Apple shares trade at a price-to-earnings ratio of 37.2. The stock has gotten slightly more expensive this year, up 19% in 2026. It's safe to say the current valuation leaves no margin of safety.

But there are valid reasons why this is an elite business, a perspective that can drive market sentiment and still introduce the possibility that the stock can produce winning returns. Nothing is guaranteed, though.

Apple possesses arguably the world's most valuable brand. It benefits from pricing power and customer loyalty. The powerful ecosystem keeps users locked in, supporting its competitive position.

And the financials are stellar. Apple's growth has picked up, thanks to strong demand for the iPhone 17 family, with revenue increasing by 16.2% year over year through the first nine months of fiscal 2026 (ended June 27). Profits are incredible, and free cash flow remains robust.

The odds aren't stacked in Greg Abel's favor

Interestingly, Apple also welcomed a new CEO. John Ternus, a company veteran, just replaced Tim Cook, who led the business during a wildly successful run that saw the "Magnificent Seven" stock soar more than 2,200% over his 15-year tenure.

Ternus has big shoes to fill. This is also true of Abel, who I believe faces an uphill battle to achieve market outperformance.

It all comes down to scale. Berkshire Hathaway is one of the most valuable companies on the planet. Growing its intrinsic value by 20% per year simply might not be possible. It was much easier to accomplish this feat when the business was a lot smaller.

Size can be an inhibiting factor to growth. This also shows up elsewhere.

As of June 30, Berkshire Hathaway had $365.5 billion in cash and short-term Treasuries on its balance sheet, equal to 34% of the company's market capitalization. There aren't enough investment candidates that are meaningful enough to move the needle. No one knows if or when the opportunities will start to flow.

The cash gives Berkshire Hathaway an invaluable financial buffer that insulates it from adverse market and economic developments. However, that cash will continue to be a drag on performance.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy.