Berkshire CEO Abel says AI to help power growth

Berkshire Hathaway CEO Greg Abel expressed optimism about the potential of artificial intelligence (AI) to drive the company's growth, particularly through the development of AI data centers. This view comes after Berkshire Hathaway made Alphabet, the parent company of Google and YouTube, its third-largest common stock holding.

Abel noted that American consumers are still grappling with the effects of high inflation and mortgage rates, which he believes will continue to make the housing market a challenging landscape in the near term. He described it as a "bumpy road" for the housing market, as U.S. single-family home starts fell to a six-month low in July, coinciding with rising mortgage rates and geopolitical tensions in the Iran war.

Despite the current housing market challenges, Abel remains confident in the long-term health of the housing sector. He believes that people will continue to pursue homeownership, even if it means a more cautious approach in the short term. Berkshire Hathaway has already made significant investments in the home building industry, including the acquisition of Taylor Morrison, a home builder, for $6.8 billion. The company also holds stakes in other home builders, such as Lennar and D.R. Horton.

Abel highlighted the growing demand for electricity to power AI data centers as a potential growth area for Berkshire Hathaway's energy business. In Iowa, where the company is based, around 8% of its electricity consumption comes from data centers. This trend could present significant opportunities for Berkshire Hathaway Energy to expand its operations.

The CEO emphasized that AI is an increasingly significant factor in the company's operations and investments. He underscored that Alphabet is a major player in the AI space, which prompted Berkshire Hathaway and Chairman Warren Buffett to allocate an additional $10 billion investment in Alphabet three months ago. As of June 30, Berkshire Hathaway held nearly 106 million Alphabet shares, totaling about $37.8 billion in value. The company's largest stock investments were previously Apple and American Express.