Greg Abel names two ways Berkshire Hathaway can profit from AI
During a visit to Japan, Berkshire Hathaway CEO Greg Abel said the company sees two main ways to profit from the development of artificial intelligence: supplying electricity to data centers and increasing investments in Alphabet, Google's parent company. He said this in an interview with CNBC Top News.
Electricity for data centers
According to Abel, supplying energy to a growing number of AI data centers is a “significant opportunity” for Berkshire Hathaway and its energy unit, Berkshire Hathaway Energy. He believes that the key constraint on building such infrastructure is having sufficient electricity to operate energy-intensive facilities.
At the same time, Berkshire Hathaway is ready to sell electricity to hyperscalers only if this does not affect rates for other consumers. Abel also acknowledged growing opposition to new data centers in U.S. communities. In his view, companies building such facilities must seriously assess community reactions and take their concerns into account, including by using technologies that reduce water use.
As an example, he cited Iowa, where Berkshire has a significant energy business. According to him, data centers there have provided substantial tax relief for residents and revenue for local services, including schools, police, and fire departments. Abel stressed that a data center must be a welcome member of the local community.
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Investments in Alphabet
The second area is Berkshire's investments in Alphabet, which now nearly amount to $36 billion. Warren Buffett initiated the initial purchases of Alphabet shares last year. Abel said the experience of Berkshire's operating companies convinced him and Buffett of AI's significant impact on U.S. business, and they considered Google an important participant in this market.
In the spring, Berkshire Hathaway bought $10 billion worth of Alphabet shares directly from the company at a 6.5% discount. Abel said that at the end of May he received an offer to participate in a large Alphabet share placement, after which he discussed it with Buffett. Alphabet raised $80 billion to finance investments in AI computing infrastructure amid unprecedented customer demand.
During his trip to Japan, Abel also met with the management of five Japanese trading companies, in each of which Berkshire owns more than 10%. He said the holding company expects to retain these investments for many decades.
