Warren Buffett isn’t known for making big investments within the technology sector. So, long-time followers of Buffett and Berkshire Hathaway were probably surprised to see a new near-$1bn investment in a company capitalising on AI infrastructure growth opportunities.
The company in question is Nucor Corp (NYSE:NUE). Buffett and his team actually invested back in the first quarter of 2025 and then topped up the position in the second quarter. But investors have only discovered the $953m spend following Berkshire’s latest regulatory filings.
Given that Buffett has been a net seller of US stocks for 11 straight quarters, seeing him deploy fresh capital in the US stock market definitely warrants attention. So, what’s behind this investment? And should others think about following in his footsteps?
Exploring the AI opportunity
On the surface, Nucor doesn’t look like an AI stock as it specialises in steel manufacturing. And with a forward price-to-earnings ratio of 12.6, the shares are certainly not priced like an AI stock either.
However, digging deeper, a clearer picture of why Buffett and his team might have invested starts to emerge. The company operates the largest electric arc furnace steel network in America. This makes it one of the largest leaders in low-cost domestic steel production.
That’s a pretty powerful advantage to have in 2025, given imported steel is facing a 50% tariff. And with Nucor offering one of the cheapest domestic alternatives, demand is skyrocketing from AI data centres.
After all, the expansion of US digital infrastructure continues to charge ahead and is heavily reliant on structural steel for buildings and power systems among other things. In fact, Nucor is already a leading supplier to some of the largest data centre projects in the US, with management actively investing to keep its competitive edge.
With that in mind, it’s not surprising to see Buffett take an interest.
What could go wrong?
There’s no denying that Warren Buffett has a knack for spotting tremendous investing opportunities. After all, through Berkshire Hathaway, he’s essentially doubled the average stock market return since the 1960s. However, not every investment made has been a winner. And just like every other stock, Nucor has some risks we must consider.
Even with the tailwinds from AI, steel remains a classically cyclical industry. A future slowdown in demand will squeeze profit margins. And with the group making aggressive investments in production expansion and technology upgrades, a sudden swing in demand could result in an overstretched balance sheet.
It’s also important to recognise that Nucor isn’t the only low-cost steel business seeking to capitalise on AI infrastructure tailwinds. Competitive pressures could start steadily chipping away at the group’s operational efficiency advantage. As such, there’s no guarantee that Nucor will be successful in executing its current strategy.
The bottom line
With demand for domestic steel rising, Nucor is seemingly in quite a favourable position. The risk of a cyclical downturn can’t be ignored, but with Buffett putting almost $1bn to work, it’s a risk that he certainly seems to think is worth taking. And with such an impressive track record, investors might be well rewarded for taking a closer look at this US stock.
