Abel: Two ways Berkshire hopes to cash in on AI

Berkshire Hathaway CEO Greg Abel told CNBC the company is pursuing artificial intelligence opportunities on two paths. In a live "Squawk Box" interview Wednesday morning , Abel said he sees providing energy to the growing number of AI data centers as a "significant opportunity for Berkshire and Berkshire Hathaway Energy" since he's long believed the biggest constraint for the buildout is having enough energy to operate the power-hungry facilities. But, he said, the company will only sell energy to hyperscalers if there is "no impact to the rates of our other customers."

The other avenue is Berkshire's now almost $36 billion investment in shares of Google parent Alphabet that was initiated by Warren Buffett last year. Abel said from the experience of Berkshire's own operating companies, he and Buffett knew AI was "going to have a significant impact on America and businesses," and " we saw Google as a significant player ."

Abel did the interview from Japan, where he was visiting a Berkshire tool-making unit and meeting with executives of the "trading houses" in which Berkshire has significant equity stakes. He said none of them mentioned rising Japanese interest rates as a "fundamental challenge right now." And while Abel does not see "any type of immediate recovery" for U.S. homebuilders with a "bumpy road for a while," he expects Berkshire's newly acquired Taylor Morrison will be a "very strong asset" five to 10 years from now because the "American dream will continue to exist."

Abel acknowledged there is growing opposition in the country to the construction of new data centers for AI. "There is a lot more pushback in the communities across the U.S." He believes companies building data centers need to "seriously evaluate" the "reaction from communities," and address those concerns by using technologies that minimize water use, as one example. Abel pointed out that in Iowa, where Berkshire has a substantial utility operation, data centers have provided "very, very substantial" tax relief for residents and provided revenues that support local services like schools, the police, and fire departments. He argued a data center has to be a "welcomed member of the community."

In the interview, Abel described how Berkshire came to make a $10 billion purchase of Alphabet stock directly from the company this spring as Google's parent raised $80 billion to "fund investments in its world-class AI compute infrastructure to meet its unprecedented customer demand." Noting that Buffett had initially purchased Alphabet shares for Berkshire's portfolio last year, Abel recounted he received a phone call on a Sunday morning in late May with an offer to participate in a large equity offering by Alphabet. "They hadn't set the size but recommended that we consider 10 billion." Abel replied he would "get back to them right away," and "very much consistent with how we manage Berkshire ... I called Warren and I said we had a significant opportunity to ... continue to invest in Google ... with a significant block." They agreed they were "comfort...