Prior to its very large investment in Alphabet, it wasn't all that clear how Berkshire Hathaway (BRKA +1.31%)(BRKB +1.18%) planned to really participate in the artificial intelligence revolution, if at all.
Sure, the large conglomerate's largest stock holding is Apple, which is sure to benefit from AI, but Apple has seemingly been slower than its "Magnificent Seven" peers to fully flesh out its AI strategy.
Now, Berkshire's plan for AI is becoming much clearer. In fact, during an interview with CNBC, Berkshire CEO Greg Abel just quantified the company’s AI opportunity.
Image source: The Motley Fool.
Generating power for AI
The big immediate opportunity for Berkshire is through its subsidiary, Berkshire Hathaway Energy (BHE), which generates and supplies various forms of power to consumers and businesses.
It's worth noting that since the pandemic, Berkshire has loaded up on energy assets through acquisitions in BHE and large purchases of stocks like Chevron and Occidental Petroleum, which together make up about 9.4% of Berkshire's large $360 billion stock portfolio.
This was happening even as most analysts and economists called for lower oil and gas prices in the years ahead. But the team at Berkshire always seemed to have conviction in the energy sector.
"It's really interesting as they've continued to announce all the data centers and data center sites. I've sort of always had the strong view that energy would be the constraint," Abel told CNBC. "There would be energy; we can produce the energy. It's how long would it take to get the sites prepared and being in a position they could serve the data centers..."
Abel views this as an opportunity for BHE.
He noted that in Iowa, where BHE owns the MidAmerican Energy Company, Iowa's largest energy company serving more than 1.6 million electric and natural gas customers across four states, 8% of the total demand last year came from data center customers.
NYSE: BRKB
Key Data Points
While Abel said Berkshire is interested in working with the hyperscalers, he added that Berkshire has told them there cannot be a negative impact on other customers' rates; in fact, there must be a benefit.
BHE's U.S. utilities collectively own 32,400 net megawatts of generation capacity currently in operation and under construction, according to the company's 2025 annual filing.
Among its energy assets are four regulated utilities that produce power from wind, natural gas, coal, solar, hydroelectric, nuclear, and geothermal sources.
These utilities serve 5.4 million retail customers and five interstate natural gas pipelines with roughly 20,900 miles of operated pipeline.
BHE is also planning to spend about $33.5 billion between this year and 2026 to expand its power generation, storage, and transmission capabilities. In the three years prior, BHE spent slightly below $29 billion on capital expenditures.
Another reason to own Berkshire
Berkshire is one of the few $1 trillion market cap companies not entirely banking on AI.
The company owns one of the largest insurance businesses in the U.S., a large railway network, a large mortgage company, a large energy company, a $360 billion stock portfolio, and roughly $365 billion in cash.
This diversity of businesses is one of the reasons the company can serve as a safe haven when economic conditions become more difficult, while also generating solid returns through the cycle.
And now investors can clearly see that Berkshire will benefit from AI, whether through its stake in Alphabet or its large power network.
