Berkshire CEO Abel says AI to help power growth

Berkshire Hathaway CEO Greg Abel said on Wednesday that artificial intelligence represents a major growth opportunity for the conglomerate, citing the expansion of AI data centers as a key driver. The remarks came after Berkshire increased its stake in Alphabet, the parent company of Google and YouTube, making it the firm’s third-largest common stock holding. Abel emphasized that the growing demand for AI infrastructure is prompting Berkshire to allocate capital toward supporting this technological shift. The CEO discussed these developments during an appearance on CNBC, where he outlined how Berkshire’s energy division stands to benefit from the surge in AI-driven data center operations. He noted that in Iowa, where Berkshire Hathaway Energy is headquartered, approximately 8 percent of the company’s electrical load comes from data centers. Abel expressed confidence that energy will continue to play a pivotal role in Berkshire’s long-term strategy, despite current challenges in the housing market and broader economic conditions. Berkshire’s investment in Alphabet began last year under the guidance of Chairman Warren Buffett, who initially identified the tech giant as a promising opportunity. Abel, however, took responsibility for authorizing an additional $10 billion investment in Alphabet earlier this year, purchasing shares at a 6.5 percent discount to the stock price. This move underscores Berkshire’s belief in Alphabet’s position as a leading force in the AI sector. As of June 30, Berkshire held nearly 106 million Alphabet shares, valued at around $37.8 billion. In addition to its focus on AI and energy, Berkshire has been expanding its presence in other areas of the economy. Recently, the company agreed to acquire homebuilder Taylor Morrison for $6.8 billion, signaling its continued interest in real estate. Abel described the acquisition as a “very strong asset” that could yield substantial returns over the next five to ten years, even amid current hesitancy among potential homebuyers due to high mortgage rates and economic uncertainty. Consumer spending patterns have come under scrutiny, with Abel acknowledging that many Americans are still grappling with the effects of elevated inflation and rising living costs. He predicted that the housing market would face a “bumpy road” in the near future, noting that U.S. single-family housing starts fell to their lowest level since November 2022 in July. These figures reflect ongoing challenges related to mortgage affordability and general economic instability, particularly in light of geopolitical tensions such as the conflict involving Iran. Beyond the United States, Berkshire continues to expand its global footprint, particularly in Japan. Abel revealed that the company holds more than 10 percent stakes in several prominent Japanese trading houses, including Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo. In March, Berkshire also acquired a 2.49 percent stake in insurer Tokio Marine as part of a strategic partnership. Abel indicated that Berkshire intends to maintain these investments for “many decades,” expressing enthusiasm for potential future transactions involving Tokio Marine. During his recent trip to Tokyo, Abel celebrated Buffett’s 96th birthday alongside the billionaire investor and his family. The visit marked a departure from Buffett’s usual practice of personally traveling to Japan, which he did in 2023. Abel noted that Buffett has shown a deep appreciation for Berkshire’s Japanese holdings, although he acknowledged that it was difficult for Buffett to see him take the lead in visiting Tokyo. Berkshire’s diverse portfolio includes numerous well-known businesses, ranging from the BNSF railroad and Geico car insurance to manufacturing firms and retail chains such as Brooks, Dairy Queen, Fruit of the Loom, and See's Candies. With a total cash stake of $364.7 billion as of June 30, Abel and Buffett continue to strategically manage Berkshire’s vast resources, seeking opportunities across multiple industries and geographies.