Berkshire Hathaway CEO Greg Abel said on Wednesday he sees significant opportunities for the conglomerate from the buildout of AI data centers, after Berkshire made Alphabet its third-largest common stock holding.
Abel separately said American consumers remain under stress from elevated inflation and mortgage rates, and that the housing market will be a “bumpy road” in the near term.
Speaking on CNBC, Abel called Alphabet a “significant player” in AI, a factor that prompted him and Berkshire Chairman Warren Buffett to authorize an additional $10
billion investment three months ago to help the Google and YouTube parent build out AI infrastructure.
“We are all seeing and feeling the impact” of AI, Abel said.
Berkshire ended June with nearly 106 million Alphabet shares worth about $37.8 billion. Its largest stock investments were Apple and American Express.
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Abel said Berkshire’s energy business could also benefit from AI growth, reflecting the growing amount of electricity needed to run data centers.
He estimated that in Iowa, where Berkshire Hathaway Energy is based, about 8% of its load came from data centers last year.
“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.”
Buffett initiated Berkshire’s investment in Alphabet last year, though Abel took credit for making the new investment at a 6.5% discount to Alphabet’s stock price.
Abel, with help from Buffett, allocates Berkshire’s capital and manages its cash stake, which totaled $364.7 billion as of June 30.
Abel Says Consumers Are Stretched
Berkshire announced the Alphabet investment on June 1, one day after agreeing to pay $6.8 billion for the home builder Taylor Morrison, which it now owns. It also invests in the home builders Lennar and D.R. Horton.
Abel expects Taylor Morrison to be a “very strong asset” in five to 10 years as more people pursue homeownership, even if they hesitate 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.”
U.S. single-family housing starts, which account for the bulk of homebuilding, fell in July to their lowest since November 2022, according to the Department of Commerce’s Census Bureau, reflecting higher mortgage rates and economic uncertainty from the Iran war.
“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.
