Greg Abel Sees AI-Powered Growth Ahead for This Berkshire Hathaway Subsidiary. Can This Catalyst Help the Conglomerate Outperform in the AI Era?

Although the company holds a sizable stake in Alphabet, much like his predecessor, Warren Buffett, current Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) CEO Greg Abel isn't making any major, hyperaggressive bets on artificial intelligence (AI) technology.

He's certainly not unaware of the industry's rapid growth, though, and is making a point of preparing one of Berkshire's subsidiaries for what seems inevitable. That's soaring demand for the electricity that powers AI data centers.

The question is, will this meaningfully move the needle for Berkshire Hathaway and its shareholders?

Image source: Getty Images.

AI and energy is definitely on Abel's radar

Given everything else happening that busy day, it would have been easy to miss. Nevertheless, as Abel commented during Berkshire's annual shareholder meeting in early May, "One of the core inputs to all those data centers -- hyperscalers -- associated with artificial intelligence is energy. Our businesses have that opportunity in front of them at Berkshire Hathaway Energy." He then added, "And yes, we're pursuing them."

Abel went on to point out that, unlike so many other players in the utility business, Berkshire Hathaway Energy is already sending 8% of its potential electricity production in Iowa, for instance, to the AI data center industry that's set up shop there. He goes on to suggest that this figure could grow by 50% (or more) over the next five years.

In other words, Berkshire's energy arm is already ready for what awaits.

But what does this opportunity practically mean for Berkshire Hathaway shareholders?

It takes some digging, but it's not a secret -- Berkshire's energy business added nearly $4 billion worth of earnings to the conglomerate's bottom line last year. That's roughly 10% of its total profits, excluding the ever-changing gains from its stock portfolio. That's not huge, but it's not insignificant either.

Data source: Berkshire Hathaway 2025 investor report.

For all the opportunity Abel says he sees on this front, however, it's not exactly a game changer.

AI takes a relatively small part of overall energy production

There's no denying the utility industry as a whole wasn't -- and still isn't -- ready for the rapid growth in electricity demand driven by the proliferation of AI data centers.

In the grand scheme of things, though, it's not as if artificial intelligence is consuming the vast majority of the nation's produced power. Recent number crunching by Pew Research indicates that data centers accounted for only about 4% of the United States' total electricity generation in 2025. The rest is still being used by everything else and everyone else. Even Pew's forecast for a doubling of this consumption by 2030 would put the AI industry's portion of power consumption in the ballpark of 8%, which is still a small minority.

So why all the angst? The capital-intensive utility business wasn't ready for any major surge in demand, having managed paper-thin differences between supply and consumption for decades.

More to the point for interested investors, while AI-driven energy demand is undeniably growing rapidly, it's growing from a small baseline. There's not enough whole-dollar opportunity here to consider it a core part of any bullish thesis for Berkshire Hathaway... at least not yet.

That doesn't mean Berkshire isn't a buy, though. If nothing else, the conglomerate remains an incredible cash cow, with a portfolio of great stocks.

James Brumley has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet and Berkshire Hathaway. The Motley Fool has a disclosure policy.