Berkshire Hathaway CEO Greg Abel sees AI, power demand as new engines of growth

Berkshire Hathaway is betting that the artificial intelligence boom will create opportunities well beyond technology stocks, with CEO Greg Abel pointing to the significant growth potential of data centers and energy business in the massive infrastructure buildout needed to power AI, a Reuters report said citing Abel's interaction with CNBC.

Abel said that Berkshire sees significant opportunities from the expansion of AI data centers, following its decision to make Alphabet its third-largest common stock holding.

Reuters reported that Berkshire ended June with nearly 106 million Alphabet shares worth about $37.8 billion, behind only its holdings in Apple and American Express.


Abel called Alphabet a "significant player" in AI in his interaction with CNBC. He said he and Berkshire Chairman Warren Buffett had authorized an additional $10 billion investment three months ago to support the Google and YouTube parent's AI infrastructure expansion.

"We are all seeing and feeling the impact" of AI, Abel said.

For Berkshire, the AI opportunity is not confined to its Alphabet stake. The technology's growing appetite for electricity could also benefit Berkshire Hathaway Energy, as data centers require large and reliable power supplies.

Abel estimated that data centers accounted for about 8% of Berkshire Hathaway Energy's load in Iowa last year, underscoring how quickly AI infrastructure is becoming a meaningful source of electricity demand.

"I've sort of always had the strong view that energy would be the constraint," Abel said. "We do still see it as a significant opportunity for Berkshire and Berkshire Hathaway Energy."

That creates an unusual link between Berkshire's technology investment and one of its more traditional businesses. As Alphabet and other technology companies pour money into AI infrastructure, Berkshire can potentially participate through both the companies building the technology and the energy systems required to keep their data centers running.

Reuters reported that Buffett initiated Berkshire's investment in Alphabet last year, while Abel took credit for the latest purchase, made at a 6.5% discount to Alphabet's stock price. Abel, with Buffett's help, oversees Berkshire's capital allocation and its cash holdings, which stood at $364.7 billion at the end of June.

But Abel's outlook is not uniformly bullish. He said U.S. consumers remain under pressure from elevated inflation and mortgage rates, while the housing market faces a difficult period.

Berkshire agreed in June to pay $6.8 billion for home builder Taylor Morrison and already owns stakes in Lennar and D.R. Horton. Abel said Taylor Morrison could become a "very strong asset" over the next five to 10 years as more people seek homeownership, even if demand remains subdued in the near term.

"We didn't see any sign of immediate recovery," in housing, Abel said. "It was going to be a bumpy road for a while."

"There's a consumer that is still clearly feeling the pain, and struggling, and having to stretch a lot further with that dollar," Abel said.

Abel made the comments from Tokyo, where Berkshire has built a sizeable investment portfolio through stakes of more than 10% in Japanese trading houses Itochu, Marubeni, Mitsubishi, Mitsui and Sumitomo. The company also took a 2.49% stake in insurer Tokio Marine in March as part of a strategic partnership.

Berkshire plans to hold its trading house investments for "many decades," Abel said, adding that Buffett remains a strong supporter of the strategy.

"Warren absolutely loves the Japanese investments," Abel said. "It wasn't easy for Warren that off I went to Tokyo."

The comments offer an early glimpse of how Abel is deploying Berkshire's vast capital base: leaning into structural growth opportunities such as AI while continuing to build around energy, housing and long-term investments in Japan.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)