Berkshire CEO Greg Abel Discloses Logic for Increasing Google Stake: Energy Becomes Biggest Constraint on AI Computing Power Expansion

TradingKey - Berkshire Hathaway CEO Greg Abel disclosed the investment logic behind Google's (GOOGL) parent company, Alphabet, in an interview with CNBC on Wednesday.

Reportedly, the company added a total of approximately $17 billion in Alphabet stock in the second quarter, propelling it to become the third-largest holding in Berkshire's stock portfolio. Abel called Google a "major player" in artificial intelligence.

Alphabet Stake Boosted by $17 Billion in Q2, Becoming Third-Largest Holding

Abel revealed that Berkshire bought $10 billion worth of Alphabet shares at a 6.5% discount about 15 months ago. He recalled: "They (Google) didn't set a size, but suggested we consider $10 billion. Warren and I discussed the size and the discount rate; I suggested 6.5%, we were happy with that, and ultimately closed the deal."

Speaking on the rationale behind the investment, Abel said Berkshire's operating businesses have clear visibility into the practical applications and returns of AI. "This drove incremental interest, and we see Google as a major player," with a strong position in AI.

Berkshire's second-quarter portfolio snapshot filed with the U.S. Securities and Exchange Commission (SEC) in August showed that the company added a total of about $17 billion in Alphabet stock during the quarter, making it the largest new addition to the portfolio for that quarter. As of the latest disclosure, Berkshire held approximately 106 million shares of Alphabet Class A and Class C stock, with a market value of about $36.6 billion.

Energy Becomes Biggest Constraint on AI Computing Expansion as Berkshire Targets Data Center Power Demand

Abel noted that energy remains a "major constraint" to the rapid expansion of AI data centers, and Berkshire is ready to meet the growing power demand of hyperscalers. "I've been a strong believer that energy would be a constraint," he said in a CNBC interview. "I still view that as a major constraint and one of the challenges, but we continue to view it as a major opportunity for Berkshire."

He revealed that Berkshire has established principles for serving hyperscalers, centered on ensuring that existing customers do not bear the costs of new data center demand—the company wants the added data center load to represent a "net benefit" to existing customers; meanwhile, host communities must understand the facility's impact on water usage and be receptive to it. Abel said that no specific energy infrastructure sites have been rejected so far, and the company will proceed with projects under construction as planned.

While electricity itself can be generated, site preparation and transmission infrastructure construction take a long time, which is precisely where Berkshire sees room for positioning. Abel added that over the long term, the massive power demand brought by AI could also accelerate investments in clean technology and water quality improvement—echoing Berkshire's heavy addition to Google parent Alphabet in the second quarter: Berkshire is betting on the demand side of AI computing power while also positioning on its supply side.