Berkshire Hathaway, led by Warren Buffett, is expanding its exposure to artificial intelligence (AI) through its wholly-owned Precision Castparts subsidiary. After a tumultuous COVID-19 pandemic period that saw a significant goodwill write-down of nearly $10 billion due to decreased demand for aerospace components, Precision Castparts reported $2.4 billion in operating cash flow in the last year, up from just $900 million during the pandemic slowdown. This resurgence is attributed to increased demand for gas turbines, which are essential for powering data centers—a market highly influenced by AI growth.
Precision Castparts specializes in manufacturing components for aerospace and industrial applications and is one of the few companies catering to this niche market. Berkshire’s acquisition of Precision for $37.2 billion in 2016 is now viewed as a strategically advantageous move, given the significant economic trends driving demand for its products. Despite not being a “pure-play” AI stock, this investment exemplifies Berkshire’s strategy of acquiring high-quality assets for long-term growth potential.
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