Finance

Buffett’s Bet: Why Berkshire Hathaway Is Doubling Down on Chevron Despite Oil Market Headwinds

Berkshire Hathaway, led by Buffett, bought $520M of Chevron shares, increasing its stake to 7% after net selling.

October 20, 2025, 8:37 AM

Investor Warren Buffett sits at his desk reading a newspaper in a photo on a spiral-bound book cover with the word 'Bullish'.

A book cover photo of investor Warren Buffett reading a newspaper at his desk. By Prachaya Roekdeethaweesab / Shutterstock.com.

Executive Summary

Warren Buffett’s Berkshire Hathaway significantly increased its stake in Chevron, purchasing nearly 3.5 million shares valued at approximately $520 million, boosting its ownership to a 7% stake.

This recent acquisition marks a notable reversal for Berkshire, which had been a net seller of Chevron shares in six of the past seven quarters.

Chevron is viewed as an attractive value investment due to its discounted valuation, a 4.5% dividend yield supported by consistent free cash flow, and its integrated business model providing resilience.

The Story So Far

Warren Buffett’s Berkshire Hathaway has significantly increased its stake in Chevron, reflecting a classic value investing approach. This move is driven by Chevron’s attractive valuation, trading at a discount compared to the S&P 500, and its robust 4.5% dividend yield supported by consistent free cash flow, despite recent challenges from declining oil prices and forecasts of future surpluses in the energy market.

Why This Matters

Berkshire Hathaway’s renewed and significant investment in Chevron, reversing a trend of selling, signals Warren Buffett’s conviction in the energy company’s long-term value and resilience. This move highlights Chevron as a potentially stable, dividend-yielding option for investors seeking defensive assets and protection against market uncertainties, even amidst challenges like declining oil prices and anticipated future surpluses.

Who Thinks What?

Warren Buffett’s Berkshire Hathaway significantly increased its stake in Chevron, viewing it as a compelling value investment due to its valuation, dividend yield, and resilience in uncertain market conditions.

Investment analysis suggests Chevron presents an attractive profile for specific investors, citing its discounted stock price, strong dividend yield, and consistent free cash flow, which could offset losses during market downturns.

Chevron faces challenges as its stock has traded sideways since 2022 due to declining oil prices and anticipated global oil surpluses, creating a difficult operating environment for producers.

Warren Buffett’s Berkshire Hathaway significantly increased its stake in Chevron during the last quarter, purchasing nearly 3.5 million shares valued at approximately $520 million. This acquisition boosts Berkshire’s ownership to a 7% stake in the energy company, marking a notable reversal after several consecutive quarters of net selling by Buffett’s holding company.

Buffett’s History with Chevron

Berkshire Hathaway first initiated a position in Chevron in 2020, following a market downturn. The investment firm has since actively managed its stake, including a substantial reduction in early 2021 before rebuilding its position later that year. Subsequent periods in 2022 saw further purchases, including a significant acquisition of 121 million shares in the first quarter.

Despite being a net seller in six of the past seven quarters, the recent $520 million purchase represents one of Berkshire’s largest stock acquisitions for the quarter, underscoring renewed interest in the oil major.

Investment Rationale and Market Context

According to analysis within the source article, Chevron presents an attractive profile for investors. The company’s stock trades at approximately 19 times earnings, which is a discount compared to the S&P 500’s average of 31 times earnings. Additionally, Chevron offers a dividend yield of around 4.5%, supported by consistent free cash flow.

However, Chevron has faced challenges, with its stock trading sideways since 2022 due to declining oil prices, which fell below $60 per barrel. Rising global production is also expected to contribute to meaningful oil surpluses in 2026, creating a difficult operating environment for oil producers.

Strategic Positioning

As an integrated producer involved in refining, chemical production, and even energy generation, Chevron is positioned to manage industry cyclicality. The company’s CEO emphasizes cost controls and capital efficiency to maintain profit stability, even amidst lower oil prices. Despite current market headwinds, the article suggests that Chevron stock remains a compelling purchase for specific investor profiles.

Investors concerned about finding market value, anticipating a potential bear market, or expecting a recovery in oil prices due to geopolitical tensions may find Chevron shares to be a suitable investment. While not considered a deep bargain, the stock is argued to be fairly valued, with its dividend yield and free cash flow consistency potentially offsetting losses during market downturns.

Key Takeaways

The recent increase in Berkshire Hathaway’s Chevron holdings appears to reflect a classic value investing approach by Warren Buffett. In an environment where market bargains are perceived as scarce, Chevron’s business model, valuation, and dividend yield position it as a resilient option for investors seeking stability and potential upside amid ongoing market uncertainties.