Abel Talks in Detail About Berkshire’s Investment for the First Time Since Taking Over: $10 Billion Increase in Alphabet Holdings, 96-Year-Old Buffett Still Involved in Decisions, Five Major Trading Houses Planned for Decades-Long Holdings

Several key directions for Berkshire's capital allocation are gradually coming to light as Abel takes over as CEO. On September 2, Abel discussed Berkshire's strategies in a CNBC interview in Tokyo, covering Japanese trading houses, a $10 billion investment in Alphabet, yen-denominated debt, and AI data centers.

Alphabet is Berkshire's most high-profile tech investment in recent times. Abel revealed that Berkshire's initial purchase of Alphabet was initiated by Buffett about 15 months ago. At the end of May this year, after obtaining the opportunity to participate in an equity financing, Abel immediately consulted with Buffett and ultimately proposed a $10 billion investment, requesting a 6.5% discount to market price. The deal was then completed.

This transaction once again shows that even though Buffett has stepped down as CEO, he is still involved in Berkshire's key investment decisions. Abel revealed that before flying to Tokyo, he had just attended Buffett's 96th birthday celebration, where they discussed investments in Japan; after arriving in Tokyo, the two spoke on the phone again that same day.

The Japanese market is another major long-term pillar for Berkshire. Abel first visited Tungaloy, an industrial cutting tool company in Fukushima, and then met with the five major Japanese trading houses and Tokio Marine Insurance. When Berkshire first disclosed its investments six years ago, its holdings in the five trading houses had just surpassed 5% each; now, each has exceeded 10%. Abel stated that the holding period for these investments will be measured in decades, and both sides are now moving from a shareholder relationship toward deeper business cooperation.

At the same time, the rapid rise in Japanese interest rates has not altered Berkshire's assessment of this investment. Abel revealed that Berkshire currently has over $15 billion in yen-denominated debt, with a weighted average remaining maturity of just over five years, but the dividends from the five trading houses still significantly surpass the interest expense on the debt.

The rapid growth of AI data centers has presented new opportunities for Berkshire’s energy business. Abel believes that the main bottleneck for data center expansion is not the lack of electricity per se, but rather that building energy infrastructure takes time.

As grid expansion and transmission capacity gradually become bottlenecks, Berkshire Hathaway Energy, which has large-scale power operations, stands to benefit. However, Abel also emphasized that such projects must not raise electricity prices for other users, must gain local community acceptance, and must take into account realistic constraints such as water resources.

Key points summarized by Wallstreet Insights:

• $10 billion added to Google, Buffett remains involved in investment decisions: Abel revealed that at the end of May this year, Berkshire obtained the opportunity to participate in Alphabet's equity financing. After discussion with Buffett, they proposed a $10 billion investment at a 6.5% discount to market price, and the deal was finalized. Although Buffett has stepped down as CEO, the two continue to discuss major investments.

• Five major trading houses to be held for decades: Berkshire now holds over 10% in each of Japan's five major trading houses. Abel stated that these investments will be held for several decades, and future cooperative opportunities in Japan and overseas are being sought.

• Yen financing continues to offer positive carry: Berkshire currently has over $15 billion in yen-denominated debt, with most maturities slightly over five years, and dividends from the five trading houses still significantly exceed the relevant interest expenses.

• AI data center bottleneck is energy infrastructure: Abel believes that electricity itself is not unavailable; the real constraint is the time needed to move from project installation to the completion of supporting energy infrastructure. Grid expansion and transmission/distribution capacity are becoming key constraints on data center growth.

• Data center projects must meet three criteria: They must not raise prices for other customers but instead bring net benefits for existing customers; control their impact on water resources; and must obtain local community approval.

• U.S. housing not expected to rebound quickly in the short term: Abel remains optimistic on the long-term value of the North American housing market but expects the market to remain volatile in the short term, with no immediate recovery.

$10 Billion Added to Google: Buffett Initiates Position, Abel Finalizes Block Trade

Berkshire's initial purchase of Alphabet was initiated by Buffett about 15 months ago and was followed by continued accumulation. At the end of May this year, Berkshire gained the opportunity to participate in an Alphabet equity financing round. Abel consulted with Buffett and proposed a $10 billion investment at a 6.5% discount to market price.

After both sides agreed on this plan, Berkshire put forward these terms to the counterparty and completed the block trade. Abel also revealed that he and Buffett remain in close communication, and this latest investment is an example of their ongoing collaboration.

As for Berkshire's confidence in Alphabet, Abel attributed it mainly to AI. Berkshire owns a large number of operating subsidiaries and can observe the application and actual economic benefits of AI directly in its businesses; at the same time, Berkshire believes Alphabet will be a major player in AI.

The Five Major Trading Houses: Berkshire Plans Multi-Decade Holding, Investment Relations Deepening into Business Partnerships

One important part of Abel’s trip to Japan was meeting each of the five major trading houses. When Berkshire first announced its investments six years ago, each position had just surpassed 5%. By 2023, the positions exceeded 7%, and with the consent of all five companies, holdings have now surpassed 10% each.

Abel stated that Berkshire still considers these five investments as multi-decade holdings. The trading houses’ strong operational performance and capital allocation capability are key reasons why Berkshire will hold them for the long term. Meanwhile, both sides are deepening cooperation beyond a simple shareholder relationship to explore long-term business partnerships and seek new opportunities in Japan and overseas.

During this Japan trip, Abel also visited Tungaloy in Fukushima. Acquired by Berkshire in 2008, the company now has about 1,500 employees in Japan with domestic revenues just under $240 million and overseas revenues about $400 million.

This year, Berkshire and Tokio Marine announced a strategic partnership. Abel said Berkshire participates in quota reinsurance for certain of Tokio Marine’s insurance business, taking a 2.5% share, and also holds about 2.5% of Tokio Marine's stock. The partnership is broad and lets both sides put forward investment opportunities, but with no obligation to participate in any specific deal. If there’s an opportunity that's mutually beneficial, Berkshire is open to joining.

Japanese Interest Rate Rises to 3%: Yen Debt Costs Climb, but Berkshire Still Has "Positive Carry"

Japan's 10-year government bond yield has risen to about 3%, becoming a market focus. However, Abel said, in discussions with the five trading houses, not one considers rising rates to be a fundamental business challenge.

For Berkshire, over $15 billion in yen-denominated debt is roughly matched with its Japanese investment cost base, with a remaining maturity just above five years. Even as higher Japanese rates increase funding costs, the five trading houses’ dividends still notably exceed related interest payments, so Berkshire still enjoys a significant positive carry.

Abel said that if conditions are right, Berkshire will continue issuing yen-denominated bonds in the future. Meanwhile, the trading houses’ profits, dividends, and buybacks still have room to grow, potentially further raising investment returns.

AI Data Centers: The True Bottleneck Is Not Power Generation, but Energy Infrastructure

With the acceleration of AI-driven data center construction, Abel sees energy as a central constraint for industry expansion. The United States can generate enough power, but the true constraint is the time it takes to move a data center from planning to full integration with energy infrastructure.

This has become a key opportunity for Berkshire Hathaway Energy. Abel revealed that in Iowa, about 8% of the power load last year came from data centers, and that new demand continues to grow.

However, Berkshire does not indiscriminately meet all data center demand. First, projects can’t raise electricity prices for other customers and should ideally provide a net benefit to existing ones. Second, careful consideration is needed regarding water usage, with a focus on minimizing consumption. Finally, local community approval is essential.

Abel also noted that resistance to data center projects is rising in some U.S. communities, but so far Berkshire hasn’t had energy infrastructure projects blocked for this reason; current projects are progressing. At the same time, the taxes and local revenue generated by data centers have become key drivers for these projects.

U.S. Housing: Long-Term Bullish, But No Short-Term "V-Shaped" Rebound

Regarding the U.S. housing market, Abel is relatively cautious. Berkshire previously acquired Taylor Morrison for $6.8 billion and increased its stake in Lennar, establishing a footprint in various parts of the housing sector.

Abel believes that over a five- or ten-year period, the North American housing market still holds long-term value, and Taylor Morrison is poised to become a key asset for Berkshire. But in the short term, he does not expect a quick recovery, rather a turbulent phase for the market. Meanwhile, Berkshire is integrating 15 home construction businesses from Clayton Homes under Taylor Morrison.

Looking at the overall U.S. economy, Abel remains relatively positive. Berkshire’s major businesses performed strongly through Q2, and demand persists, though consumer pressure is more evident, leading to more cautious spending.

From Google to Japan's five major trading houses, AI data centers to U.S. housing, Abel’s interview illustrates a clear long-term investment logic: seek assets capable of creating lasting value, remain patient through short-term volatility, and leverage Berkshire’s vast industrial base to find new investment and business opportunities.

The following is the full interview transcript:

CNBC Interview: Berkshire CEO Greg Abel on Japanese Investments, Alphabet, AI Data Centers, and the U.S. Housing Market

Becky Quick: Welcome back. Berkshire Hathaway made its first investment in Japan’s five major trading houses over six years ago, and has been adding to these holdings ever since. Currently, Berkshire holds more than 10% in each of the five companies. CEO Greg Abel is now in Japan. Next, he'll share Berkshire’s business progress and his impressions from his Japan visit. Greg, great to see you. Thanks for joining us.

Greg Abel: Good morning, Becky. It’s great to be on "Squawk Box."

Quick: Good morning. Though I imagine it’s evening in Japan now. Let’s begin by talking about why you’re in Japan and what you’ve been doing there.

Abel: Sure. This trip to Japan has several important objectives. First, I went to Tungaloy. That’s one of our Japanese operating companies and belongs to IMC, which makes cutting tools and inserts.

Our team and I spent the afternoon in Fukushima, and it’s truly an amazing story. We acquired the company in 2008. At that time, we built the business almost from scratch. It originated as a Toshiba carve-out and was relatively small. Now, it has several important plants in Fukushima.

We have 1,500 employees in Japan, which is quite special. The company’s Japanese sales are just under $240 million, and another $400 million overseas. So, it’s a lean team that’s built an amazing business. It was a great way to start the Japan trip.

After that, I visited the five major trading houses and Tokio Marine.

Quick: About six years ago, we first learned of your investments in Japan’s five trading houses. At that time, Berkshire initially took about a 5% stake in each. You and Warren Buffett agreed not to take the holdings above 9.9% without their consent.

I imagine the trading houses are pleased to have Berkshire as a shareholder. Now, you own more than 10% of each. A big part of that is their own share buybacks.

What’s your long-term plan for these holdings? How are you cooperating with them?

Abel: You’re right. This goes back to six years ago. We announced the investment on Warren's 90th birthday in U.S. time; the next day, Tokyo saw the official announcement about our slightly over 5% stake.

From the outset, we made clear this is a long-term investment. We planned to hold for the long term, and we were eager to build relationships with each of the five companies.

Three years later, in 2023, we came to Tokyo and met each company. At that point, our positions had increased to over 7%, and their business performance was strong.

As you said, their capital management has been outstanding: buying back shares, raising dividends, and steadily improving overall results.

We then requested approval to raise holdings above 10%. Previously, we kept the stake below 10% unless agreed by the trading houses’ management; only with their consent did we go above that mark.

Once approved, we took our holdings past 10%. It’s definitely a long-term investment that we plan to hold for decades. Meanwhile, we’re actively building strong relationships and seeking further investment and cooperation opportunities in Japan and abroad.

Each visit builds on previous discussions in pursuit of new opportunities, and the exchanges have always been excellent.

Quick: Greg, can you talk about your partnership with Tokio Marine and your current holding? Recently, there have been reports that this Japanese insurer is looking at acquisitions, possibly Australia’s Suncorp or Canada’s IAG.

These reports suggested Tokio Marine might leverage Berkshire’s balance sheet for support. Any updates on these discussions? Would Berkshire help finance these potential deals?

Abel: Yes. Before our annual meeting, we announced our transaction with Tokio Marine. It’s a really good opportunity, as they’re an excellent partner.

We’re pleased with the agreement. We have 2.5% of their underwriting book—2.5% of their insured business. And we hold about 2.5% of their equity. We then announced a strategic partnership.

The partnership is broad. Both sides can bring ideas, but there’s no obligation to act.

If a transaction is mutually beneficial, we’d certainly go forward together. But as you might expect, we won’t comment on any specific companies you mentioned.

Quick: Ok. Greg, when you first invested in Japan, one move was to issue yen bonds. I think that was quite profitable for you given low Japanese rates at the time.

This morning, we’ve discussed that the 10-year yield in Japan is at a 30-year high. I believe you now hold over $15 billion in yen-denominated debt. What does this mean going forward? Will you keep issuing yen bonds? What are the maturities? What does rising Japanese rates mean for you?

Abel: Yes, that’s a hot topic in Tokyo and the Japanese media.

Becky, interestingly, none of the trading houses see the current rate level as fundamentally challenging. They’re following it, but the impact is still relatively modest.

I believe the 10-year just ticked a 30-year high—

Quick: Yes.

Abel: Right, just hit 3%. They see it as entirely manageable.

For us, yes, we have a yen bond and debt portfolio that matches our investment cost base in these companies. These bonds have a little over five years average remaining life.

Currently, we have a positive carry—the dividend we receive exceeds the interest we pay.

But we still expect to issue more yen debt at the right opportunity. And there’s visible profit growth in these core companies that could raise dividends further with continued buybacks.

So, while rate increases add cost, we still see growth in returning capital from these trading houses.

Quick: Greg, we spoke with Warren Buffett in July on CNBC about a range of topics. One interesting thing was Berkshire’s investment portfolio.

You now run the company. He said you’re in charge but that you two talk almost daily. He also said establishing the Alphabet position was originally his idea.

Can you discuss your working relationship with Warren? How are you managing Berkshire’s stock portfolio now?

Abel: Very well, thanks.

A good example is, Warren just celebrated his 96th birthday last Sunday. Before flying to Tokyo, I visited Warren and celebrated with his family and friends—a wonderful afternoon.

Then I flew to Tokyo. Warren is very excited about our investments in Japanese firms, so I can say my trip to Tokyo meant a lot to him. Yes, we have an excellent working relationship. We regularly talk about all sorts of things. In fact, just this Sunday we discussed Japan investments.

I spoke to him earlier today as well, just reporting back about which meetings I’d had and how the companies are doing. That’s how it’s always been. We enjoy talking about the businesses and the overall portfolio.

You’re correct: Warren began the Alphabet position about 15 months ago or a little earlier. He made the initial buy. Then we built it up—he continued buying, and we were always discussing subsequent investments.

Then, at the end of May, I got a Sunday morning call asking if we were interested in joining a forthcoming equity offering. At that point, terms and scale were still unclear.

I said I’d reply soon. This fits how we manage Berkshire and our approach to governance. So I rang Warren and told him about this important opportunity to further invest in Google via a block trade.

We discussed the investment size. The counterparty suggested $10 billion or even more. Warren and I discussed the scale and possible discount. I suggested 6.5% off market price, which we found satisfactory. We responded and secured the block shares on those terms and closed the deal.

Quick: Why are you bullish on Alphabet?

Abel: At the highest level, we don’t talk about specifics of any particular equity investment.

But Alphabet is special. We’ve seen similar in other businesses. First, obviously, AI is having an impact. We all realize it will significantly affect America and business.

Across our operations, we can see first-hand how we use AI and the benefits it brings. This increased our interest in Alphabet.

We believe Google is a significant player in AI. Of course, there’s more to Google, but those are the fundamental reasons for our interest and large investment.

Quick: Let me ask about AI and data center construction.

You’ve been in infrastructure at Kiewit and Berkshire Energy for decades, so you understand the critical bottleneck described in AI build-out—energy supply.

Where are we in data center construction? What unique Berkshire opportunities do you see?

Abel: Yes, it’s really interesting. Companies keep announcing new data centers and campuses.

I’ve always believed energy will be a constraint—data centers need large amounts, and we can produce it. The issue is, how long does it take to make a site truly data center-ready?

I still see that as a major constraint. There are other challenges, but we feel this is a real opportunity for Berkshire and Berkshire Hathaway Energy.

Look at Iowa: last year, about 8% of our load came from data centers. We’re seeing increasing load, including existing and new customers we can serve.

We’ve always followed some basic principles, agreed with every hyperscale client and discussed with the governor and regulators.

First, we’re interested in serving these large clients but won't affect other customers’ rates. Actually, our principle is that data center projects must deliver net benefits to existing customers.

Second, the community must understand the water impact. With new technology, data centers use less water, and that’s more controllable.

Finally, the community must welcome the data center. We believe in being part of a welcoming community. That’s ultimately the data centers' decision, but we encourage careful evaluation of local reactions. I know you’ve discussed this a lot—the opposition is growing in parts of the U.S.

So far, we haven’t had any sites denied. Our infrastructure projects are all advancing. The projects I’m referring to are our energy infrastructure, not the data centers themselves—but they must meet these criteria I outlined.

Joe Kernen: Greg, if you don’t define the narrative, others will fill the vacuum.

There’s a Wall Street Journal article today about data centers—roughly, "Protect the planet, build more data centers." It says demand for reliable energy is driving innovation and that AI helps develop clean technology.

This could be a once-in-a-lifetime chance to clean up the grid, rethink water quality, and accelerate technology—

Abel: Yes.

Kernen: If you don’t tell that story, they'll tell it another way—I guarantee it.

Abel: No, Joe, you’re absolutely right. Framing matters, and the narrative is evolving.

Initially, people worried about rates and existing customers. As you said, that’s changing. Now, there’s more dialogue about water, and data centers are proactive about their usage.

More discussion is happening. At least in Iowa, which has a strong agricultural community, there's a compelling story: building energy infrastructure and data centers means property tax revenue for counties and funds for schools, police, fire, and other public services.

That story must also be told—people need to understand the concrete benefits these projects bring to communities.

Quick: Greg, let’s talk about U.S. housing.

You acquired Taylor Morrison for $6.8 billion since our last chat and increased your position in Lennar.

That’s just one way you’re in this market. You have many channels—paint sales, other building materials, Berkshire Hathaway real estate—to track housing.

With rising U.S. rates and mortgage costs, where do you see the market headed?

Abel: It’s fascinating. We discussed this with Taylor Morrison and their CEO, Sheryl.

We have a very long-term view on North American housing. The American Dream will persist. Five or ten years from now, Taylor Morrison will still be a quality Berkshire asset. I’ll get to that in a minute.

We’re integrating parts of Clayton Homes—specifically, its 15 home builders, now being added to Taylor Morrison’s team. But, Becky, we were clear: we don’t see housing rebounding immediately or surging higher.

For Berkshire, the coming period could still be bumpy. Of course, when you talk to industry players, like Sheryl, she’s extremely optimistic. But based on our conversations, we don’t expect a rapid rebound.

Still, it is a worthwhile industry, and our goal is to hold for the long term.

Quick: Greg, looking across the U.S. and other world economies, how are things from a business perspective? How are consumers faring?

Abel: It’s fascinating. Here in Tokyo, the economy is vibrant—you can really feel it.

The trading houses are performing strongly and are confident, not just in the resource sides I follow but in what they call non-resource businesses, which are also doing well.

Looking at our Q2 business and results, key Berkshire industrials had strong performance. So you see ongoing demand. But you can sense customers and consumers are feeling the pressure—people are making every dollar go further, and that pressure is real.

We always factor that into future outlooks. But at least from what we saw in Q2, the economy’s fundamentals still look strong.

Quick: Greg Abel, thank you so much for joining us this morning—or tonight in Tokyo. We appreciate it.