The news landed last week: Berkshire Hathaway slashed its Chevron stake by 35 percent in the first quarter, dumping 45.8 million shares worth roughly $8 billion at what amounts to a record price. Greg Abel, now running the investment book in his first full quarter as CEO, apparently decided the time to take profits had arrived.
The reaction from retail investors has been predictable. If the Oracle of Omaha's successor is selling, something must be wrong with Chevron, right?
I would argue the market has it backwards. The problem with Chevron isn't anything happening at the business. The problem is that the stock already ran so far ahead of its fundamentals that Buffett himself bought his last 8 million shares at what looked - in retrospect - like the top.
Let's look at the numbers.
Chevron delivered a strong enough first quarter. Reported earnings came in at $2.2 billion, down from $3.5 billion a year earlier, but only because of mark-to-market timing effects that management warned would hit $2.7 billion to $3.7 billion. Adjusted earnings were $2.8 billion, or $1.41 per share. Cash flow from operations, excluding working capital, was $7.1 billion. Adjusted free cash flow was $4.1 billion. The company returned $6 billion to shareholders in dividends and buybacks.
Full-year 2025 operating cash flow was $33.9 billion. For context, that is more cash from core operations than most S&P 500 companies generate in a year. The balance sheet sits at a net debt ratio of 17.9 percent and a debt-to-equity ratio of 0.25 - among the strongest in the energy sector. Management is guiding for 7 to 10 percent production growth in 2026 with capital expenditure of $18 to $19 billion, and expects $3 to $4 billion in structural cost reductions from the Hess integration.
None of this is broken. The business is producing, growing, and returning enormous cash.
Now let's talk about valuation.
Chevron's stock is trading at roughly $197. That works out to an EV-to-EBITDA multiple of approximately 9.95x, which is 29 percent above the company's own 10-year median of 7.69x. That matters because it means you are paying a premium for an oil major in a world where the commodity cycle has already done most of its work lifting the share price. The stock is up roughly 30 percent from its 2025 average, and sits near the top of its 52-week range of $134 to $215.
Relative to peers, the picture gets harder to justify. ExxonMobil - the larger, more capital-disciplined operator - has traded in the 7.8x to 11x EV/EBITDA range, but recent consensus data places Exxon at the lower end of that band while Chevron sits near the top of both their ranges. For an investor choosing between two integrated supermajors with similar commodity exposure, Chevron's premium is not earned by any meaningful difference in cash flow quality, growth trajectory, or balance sheet strength.
The dividend yield of 3.6 percent is attractive in a vacuum. But you do not buy Chevron for the yield. You buy it because the business generates cash, reinvests at attractive returns, and grows the payout over time - which is exactly what the stock price run has already priced in.
This does not mean Chevron is a bad company. It means the margin of safety - the gap between what you pay and what the business is worth - has evaporated. That is the entire difference between a value investment and a speculation dressed in dividend clothing.
While it's true that the Q1 timing effects depressed reported earnings, those effects will reverse in future quarters. The cash flow engine is intact. Production is growing. The Hess integration cost savings are on track. But none of those positives change the fact that the market has already done a significant amount of work pricing in a successful integration and continued production growth.
There's a lesson here about how to interpret Berkshire's moves. When Buffett built his Chevron position over the prior years, he was buying a cash-flowing integrated oil major at sub-8x EV/EBITDA - a multiple that implied you were getting a mature, growing business at a discount. The Q4 2025 purchase of 8 million shares, which pushed the position to roughly 130 million, likely happened at prices that still carried some margin. The Q1 2026 exit of 45.8 million shares happened when the stock had run into a zone where it no longer did.
That is not a sell signal for Chevron as a business. It is a sell signal for Chevron at $197.
Even if oil prices stabilize at current levels and Chevron hits the top end of its production guidance, the stock at 10x EBITDA does not offer the cushion that deep-value investing requires. If commodity prices slide, or integration costs exceed guidance, or the market simply rotates out of energy, there is very little discount left to absorb the shock.
I would rate Chevron a Hold at current levels. The cash flow is real, the dividend is safe, and the company is well-managed. But the stock has moved from fantastically undervalued to fairly valued - and possibly richer - over the past 18 months. The window for asymmetric upside closed when the multiple stretched above the company's own long-term average. For energy investors hunting for the same kind of cash-flow discount that made Buffett a buyer in the first place, there are better opportunities at lower multiples elsewhere in the sector.