Microsoft CEO Satya Nadella Calls for Realistic AI Expectations, Emphasizing Economic Impact Over Hype

Satya Nadella says AI is yet to find its killer app

Microsoft CEO is more interested in neural nets boosting GDP than delivering superhuman intelligence While the likes of OpenAI and Alibaba are talking up artificial general intelligence (AGI) capable of replacing humans, Microsoft CEO Satya Nadella argues AI's success should be measured by its benefit to the global economy - which may come once the technology finds a killer app to match the impact of email or Excel. "Us self-claiming some AGI milestone, that's just nonsensical benchmark hacking," the chief executive said during an appearance on podcaster Dwarkesh Patel's YouTube show this month. Nadella thinks a better benchmark for AI's success should be its ability to boost a country's gross domestic product. "When we say: 'Oh, this is like the industrial revolution,' let's have that industrial revolution type of growth. That means to me, 10 percent, seven percent for the developed world. Inflation adjusted, growing at five percent, that's the real marker." Few nations achieved that pace of growth in 2024. Nadella suggested that growth hasn't eventuated because it's going to take time before folks understand how to use AI effectively, assuming they find a use for it - just as it took some years for the personal computer to find its feet. "Just imagine how a multinational corporation like us did forecasts pre-PC, and email, and spreadsheets. Faxes went around, somebody then got those faxes and then did an inter-office memo that then went around, and people entered numbers, and then ultimately a forecast came out maybe just in time for the next quarter," Nadella explained. Who said my life's goal is to triage my email? "Then somebody said: 'Hey, I'm just going to take an Excel spreadsheet, put it in an email, send it around, people will go edit it, and I'll have a forecast.' The entire forecasting business process changed because the work artifact and the workflow changed. That is what needs to happen with AI being introduced into knowledge work," the CEO said. Investors who have watched Microsoft spend billions on AI infrastructure, and announce plans to spend tens of billions more, may find Nadella's view that artificial intelligence is yet to find a niche concerning. Even after AI finds its place at work, Nadella doesn't think it will outright replace knowledge workers. "Don't conflate knowledge worker with knowledge work," he said. "The knowledge work of today could probably be automated, [but] who said my life's goal is to triage my email?" Instead, he argues AI agents will allow workers to focus on higher-value tasks. Whether this is actually how it'll play out, or whether enterprises will take this as an opportunity to reduce costs by cutting staff remains to be seen. Even if AGI or so called "AI superintelligence" - theoretical machines with cognitive capabilities that exceed human brainpower - turn out to be more than hype, Nadella still doesn't expect them to replace humans anytime soon due to legal issues. "Today, you cannot deploy these intelligences unless and until there's someone indemnifying it as a human," he said. ®

Satya Nadella says AI is yet to have its Excel moment

The real benefits should be measured in its GDP contribution Satya Nadella has said that AI should be measured on its benefit to GDP, rather than "self-claiming some AGI milestone," the Microsoft CEO said on Dwarkesh Patel's podcast earlier this month. "That's just nonsensical benchmark hacking," he continued, stating AI was yet to find the application that would make the years of hype a reality. "When we say: 'Oh, this is like the industrial revolution,' let's have that industrial revolution type of growth. That means to me, 10 percent, seven percent for the developed world. Inflation adjusted, growing at five percent, that's the real marker," Nadella said. Nadella used Microsoft Excel as a comparison for how AI is yet to find its proper place in the modern workplace, with physical documents and faxes delivering being an arduous task that would present a forecast "maybe just in time for the next quarter." "Then somebody said: 'Hey, I'm just going to take an Excel spreadsheet, put it in an email, send it around, people will go edit it, and I'll have a forecast.' The entire forecasting business process changed because the work artifact and the workflow changed. That is what needs to happen with AI being introduced into knowledge work," Nadella said. But the Microsoft CEO doesn't think AI will replace knowledge work, but rather free up more time for knowledge workers to focus on higher-value tasks, asking "who said my life's goal is to triage my email?" Many workers already live in fear of being replaced as companies see AI as a tool to reduce costs and increase profits. Luckily for us, the main obstacles to prevent AGI - or AI models with cognitive capabilities that exceed the human brain - from replacing human workers are legal issues. "Today, you cannot deploy these intelligences unless and until there's someone indemnifying it as a human," Nadella said.

Satya Nadella just exposed AI's biggest lie

Microsoft CEO Satya Nadella emphasized the need for realistic expectations regarding artificial intelligence (AI) during a recent podcast interview, citing the lack of meaningful economic impact from current AI spending and hype. Nadella's remarks aimed at the tech industry advocate for a focus on measurable outcomes, asserting that success should be quantified by global economic growth rather than theoretical achievements of AI systems, such as solving obscure math puzzles. He argued that while such benchmarks are interesting, they lack practical utility. He expressly rejected notions of "artificial general intelligence" that could replace humans across most tasks, declaring it a distraction from the need for the industry to generate profits before investors become impatient. Nadella pointed out that, to evaluate AI's impact akin to that of the Industrial Revolution, there must be tangible GDP growth driven by AI adoption. He stated, "If you're going to have this explosion, abundance, whatever, commodity of intelligence available, the first thing we have to observe is GDP growth." Nadella remarked that achieving 10% of inflation-adjusted growth attributed to AI would demonstrate its meaningfulness, emphasizing that investing billions into AI without actual demand will not lead to real GDP growth, putting those investments at risk. Despite his cautionary outlook, Microsoft has invested significantly in the AI race, committing more than $12 billion to OpenAI, a key player in the field. While endorsing major projects like OpenAI's Stargate as essential for lowering AI costs and enabling GDP growth, Nadella's company has shown caution by not providing all the computational resources requested by OpenAI, suggesting measured investments in the sector. Salesforce CEO says LLM capabilities are nearing their limit Organizations across various industries face challenges in implementing current AI tools, potentially due to discomfort with AI in critical functions or uncertainty about its application. The initial reception of Microsoft's Copilot has been underwhelming, with users reporting dissatisfaction and questioning its value. In response to low adoption rates, both Microsoft and Google have integrated AI chatbots into enterprise subscriptions, effectively mandating their usage. Klarna, known for its buy-now-pay-later services, previously claimed it would replace most customer support representatives with AI but later revised these statements, acknowledging that it primarily replaced a basic phone tree system with AI, which did not significantly enhance customer service and may have driven users away in frustration. The AI industry continues to seek breakthroughs that would enhance the practical utility of AI, such as developing bots capable of navigating computers. However, existing language models are often described as sophisticated autocomplete systems, frequently generating incorrect information while mimicking human writing without true comprehension. The tendency of chatbots to provide confident yet inaccurate responses can mislead users, leading to erroneous decision-making. Nadella's comments aim to urge tech executives to temper their hype surrounding AI, noting that while AI safety issues persist -- including potential misuse for creating deepfakes or spam -- the exaggeration of AI's capabilities is widespread. He posited that industry stakeholders will eventually need to substantiate their claims with actual consumer willingness to spend money on these tools. Current use cases, such as utilizing AI to enhance product manual searches, remain marginal. A report from Bank of America in late 2024 warned that AI is still in its nascent stages, likening its trajectory to that of the internet in the 1990s and suggesting a potential market correction similar to the dot-com boom. Nadella has echoed these concerns, anticipating a potential washout in the sector. While tech-savvy individuals on platforms like X frequently engage with chatbots, this interaction does not mirror broader usage trends in the marketplace. Despite claims of over 400 million active ChatGPT users, a significant portion engage with the free tier, which does not reflect the critical needs of businesses. The forthcoming reckoning for the industry appears inevitable.

Microsoft CEO Admits That AI Is Generating Basically No Value

Microsoft CEO Satya Nadella, whose company has invested billions of dollars in ChatGPT maker OpenAI, has had it with the constant hype surrounding AI. During an appearance on podcaster Dwarkesh Patel's show this week, Nadella offered a reality check. "Us self-claiming some [artificial general intelligence] milestone, that's just nonsensical benchmark hacking to me," Nadella told Patel. Instead, the CEO argued that we should be looking at whether AI is generating real-world value instead of mindlessly running after fantastical ideas like AGI. To Nadella, the proof is in the pudding. If AI actually has economic potential, he argued, it'll be clear when it starts generating measurable value. "So, the first thing that we all have to do is, when we say this is like the Industrial Revolution, let's have that Industrial Revolution type of growth," he said. "The real benchmark is: the world growing at 10 percent," he added. "Suddenly productivity goes up and the economy is growing at a faster rate. When that happens, we'll be fine as an industry." Needless to say, we haven't seen anything like that yet. OpenAI's top AI agent -- the tech that people like OpenAI CEO Sam Altman say is poised to upend the economy -- still moves at a snail's pace and requires constant supervision. So Nadella's line of thinking is surprisingly down-to-Earth. Besides pushing back against the hype surrounding artificial general intelligence -- the realization of which OpenAI has made its number one priority -- Nadella is admitting that generative AI simply hasn't generated much value so far. As of right now, the economy isn't showing much sign of acceleration, and certainly not because of an army of AI agents. And whether it's truly a question of "when" -- not "if," as he claims -- remains a hotly debated subject. There's a lot of money on the line, with tech companies including Microsoft and OpenAI pouring hundreds of billions of dollars into AI. Chinese AI startup DeepSeek really tested the resolve of investors earlier this year by demonstrating that its cutting-edge reasoning model, dubbed R1, could keep up with the competition, but at a tiny fraction of the price. The company ended up punching a $1 trillion hole in the industry after triggering a massive selloff. Then there are nagging technical shortcomings plaguing the current crop of AI tools, from constant "hallucinations" that make it an ill fit for any critical functions to cybersecurity concerns. Nadella's podcast appearance could be seen as a way for Microsoft to temper some sky-high expectations, calling for a more rational, real-world approach to measure success. At the same time, his actions tell a strikingly different story. Microsoft has invested $12 billion in OpenAI and has signed on to president Donald Trump's $500-billion Stargate project alongside OpenAI CEO Sam Altman.

Microsoft's Satya Nadella Pumps the Breaks on AI Hype

Fears of an artificial superintelligence that could replace humans are just a distraction at a time when ChatGPT still has major shortcomings. The world has yet to turn any of today's AI hype and spending into a meaningful lift in the actual economy, says Microsoft CEO Satya Nadella. The comments were made during a podcast interview in which he put a measuring stick on AI's true impact: Success will be measured through global economic growth rather than arbitrary benchmarks of how well AI programs can complete challenges like obscure math puzzles. Those are interesting in isolation but do not have practical utility. The comments seem to be targeted directly at the tech industry, imploring insiders to stop spreading hype about a so-called "artificial general intelligence" that could replace humans in most tasks. Nadella said essentially that it will not happen, and either way is an unnecessary distraction when the industry needs to get practical and just try and make money before investors get impatient. Microsoft is the primary backer of OpenAI, whose CEO Sam Altman has long stoked fears of AI taking over the world. Critics often say Altman's hype is primarily about placing himself at the centers of power and maintaining control through regulatory capture. "If you're going to have this explosion, abundance, whatever, commodity of intelligence available, the first thing we have to observe is GDP growth," Nadella said. "This is where we get a little bit ahead of ourselves with all this AGI hype. When we say this is like the Industrial Revolution, let's have that Industrial Revolution type of growth." He went on to say that 10% of inflation-adjusted growth attributed to AI would prove that the technology is actually as meaningful as the Industrial Revolution. "It can't just be supply side," meaning the hundreds of billions being invested into AI companies today does not count as real GDP growth, because eventually there needs to be actual demand on the other side for the products being built or else these companies will crash and burn. Nadella's comments appear to be intended to lower expectations while the AI industry remains white-hot. Still, Microsoft itself continues to plow billions of dollars into competing in the AI race, having been an early backer of OpenAI and putting more than $12 billion into the startup. Nadella justified massive infrastructure projects like OpenAI's Stargate as necessary to bring the costs of AI down and support that massive GDP growth (Meta CEO Mark Zuckerberg has made similar comments), but Microsoft has also let OpenAI take infusions of cash from others and has been unwilling to supply all the compute resources the startup wants, suggesting it is being cautious. It has been developing its own lower-cost models to supplement OpenAI's ChatGPT. Across numerous industries, companies are struggling to implement the AI tools that have been built today, perhaps because they are not comfortable using AI for critical functions, or they do not know how best to use it. The early reception of Microsoft's Copilot, an AI agent for enterprises, has not been good, with companies and even insiders at Microsoft complaining it is lackluster and not worth the cost. Microsoft and Google have begun incorporating AI chatbots into their standard enterprise subscriptions rather than trying to charge extra, essentially forcing them on users following low adoption. Klarna, the buy-now-pay-later company, garnered a lot of attention after its CEO said last year it would replace most of its customer support representatives with AI chatbots. The CEO recently walked that claim back, as reports found that Klarna had essentially just replaced a basic phone tree system with AI, which is not revolutionary and likely resulted in many customers quitting chats out of frustration. Many banks tried replacing their L1 customer support with bots in the past to bad results. The AI industry continues to look for the ultimate unlock that will make AI truly "intelligent" and useful for a broad range of tasks, like adding bots that can navigate a computer. But language models can fundamentally be described as supercharged autocomplete tools, prone to returning incorrect information because they are skilled at creating a facsimile of a human-written sentenceâ€"something that looks goodâ€"but chabots are not doing any actual thinking. Various methods like test-time thinking have been deployed to try and improve the accuracy and performance of chatbots and make them more closely mimic humans. But the nature of chatbots to answer questions confidently even when they do not know the truth remains a problem that results in users spending significant time just fact-checking the results. Or worse, simply accepting what they return as fact and making decisions based on it. In that sense, Nadella is trying to slap tech executives awake and tell them to cut out the hype. AI safety is somewhat of a concernâ€"the models can be abused to create deepfakes or mass spamâ€"but it exaggerates how powerful these systems are. Eventually, push will come to shove and the tech industry will have to show that the world is willing to put down real money to use all these tools they are building. Right now, the use cases, like feeding product manuals into models to help customers search them faster, are marginal. Bank of America issued a report in late 2024 warning that AI remains in its early stages and is following the trajectory of the internet in the 1990s, implying there will be a correction similar to what occurred in the dot-com boom. Nadella echoed similar concerns of a washout coming. A lot of tech-savvy people on X are using chatbots all the time, but X is an echo chamber, and that usage is not reflected in the real world. ChatGPT claims more than 400 million active users, but that includes consumers on the free tier, who do not have the same mission-critical needs of businesses. Eventually, the check will come due.

Microsoft CEO says there is an 'overbuild' of AI systems, dismisses AGI milestones as show of progress

Nadella suggested AI progress should be measured by economic growth. Microsoft CEO Satya Nadella sat at an interview where he outlined the company's plan for artificial intelligence, surprising some in the space in an hour-long session with Dwarkesh Patel. Nadella talked about how AI's impact should be measured, the exponential growth for compute demand, its practical applications, and how it will affect humans -- and Microsoft's recent quantum breakthrough. However, one of the biggest revelations in the interview was his approach to building more hardware for AI. Nadella says that Microsoft will still need to build compute that can "actually help me not only train the next big model but also serve the next big model." However, he also said that "there will be an overbuild" and that "it's not just companies deploying, countries are going to deploy capital". The Microsoft CEO said that even though he builds a lot, he also plans to lease a lot of compute. "I am thrilled that I'm going to be leasing a lot of capacity in '27, '28," Nadella said. "Because I look at the builds, and I'm saying, 'This is fantastic.' The only thing that's going to happen with all the compute build is the prices are going to come down." He likened this mindset of putting up more compute on the supply side argument of "Hey, let me build it and they'll come." However, he pointed out that supply and demand must have some equilibrium, and that he's tracking both sides of the equation. He said that you have to have proof that initial investments in AI hardware would translate into demand, ensuring that you can reinvest your capital. Nadella also said that general intelligence milestones aren't the real indicators of how AI has come along. "Us self-claiming some AGI milestone, that's just nonsensical benchmark hacking to me." Instead, he compared AI to the invention of the steam engine during the Industrial Revolution. "The winners are going to be the broader industry that uses this commodity (AI) that, by the way, is abundant. Suddenly productivity goes up and the economy is growing at a faster rate," said the CEO. He then added later, "The real benchmark is the world growing at 10%." The Microsoft CEO did not explicitly say that his company will stop building AI data centers, especially as the company has just signed a contract to restart the Three Mile Island nuclear plant for its data centers. However, it seems that he's already put a cap on their capital expenditure, especially as competitors are also putting up their own infrastructure. Instead, Microsoft might lease capacity from them. Aside from all this, Nadella also showed off Microsoft's breakthrough quantum chip, which he calls a "transistor moment" in quantum computing. The greatest advancement here is that the development could potentially make it feasible to build a quantum computer with millions of qubits, allowing the company to build a "utility-scale quantum computer." Nadella even claimed that they'll actually be able to build this in about four years' time.

Microsoft CEO Satya Nadella Warns Of Dot-com-Like AI Bubble, Pushes For Measuring AI Impact With GDP Growth: 'Self-Claiming AGI Milestone Is Just Nonsensical Benchmark Hacking' - Microsoft (NASDAQ:MSFT)

Microsoft Corporation MSFT CEO Satya Nadella has cautioned against the hype surrounding artificial intelligence (AI), comparing the current frenzy to the dot-com bubble. What Happened: During a conversation with Dwarkesh Patel that was made public on Wednesday, Nadella said AI's long-term impact must be measured by its ability to drive global GDP growth rather than arbitrary benchmarks. "If you're going to have this explosion, abundance, whatever, commodity of intelligence available, the first thing we have to observe is GDP growth," Nadella said. "Before I get to what Microsoft's revenue will look like, there's only one governor in all of this. This is where we get a little bit ahead of ourselves with all this AGI hype." See Also: Satya Nadella Said 'We Should Take Development Out Of China Very, Very Seriously.' Now, DeepSeek's R1 Has Emerged As A ChatGPT Killer, Outperforming OpenAI With 50x Lower Costs: Here's More He criticized the tech industry's tendency to claim artificial general intelligence (AGI) breakthroughs without real-world validation. "Us self-claiming some AGI milestone, that's just nonsensical benchmark hacking to me," he stated, adding, "The real benchmark is: the world growing at 10%." Nadella also addressed concerns over reckless overbuilding in AI infrastructure, drawing parallels to the dot-com boom. "There was a lot of money lost," he said, referring to the early 2000s tech crash. "Everybody's going to race... the only thing that's going to happen with all the compute builds is the prices are going to come down," the CEO said. Subscribe to the Benzinga Tech Trends newsletter to get all the latest tech developments delivered to your inbox. Why It's Important: Nadella's remarks highlight growing concerns about an AI investment bubble, where companies are pouring billions into infrastructure without clear economic returns. Despite investor concerns over returns, big tech is going all in on AI, with Amazon, Meta, Microsoft, and Alphabet investing a record $320 billion in AI infrastructure in 2025. This marks a jump from $246 billion in 2024.e Amazon is leading with over $100 billion in planned investment. Microsoft and Alphabet are each set to spend around $80 billion. Meta is committing more than $60 billion. Meanwhile, on Wednesday, Microsoft also unveiled Majorana 1, its first quantum chip. Check out more of Benzinga's Consumer Tech coverage by following this link. Photo courtesy: Shutterstock Read Next: OpenAI's Sam Altman Flip Flops On Trump After $500 Billion Stargate AI Project, Says 'I Wish I Had Done More Of My Own Thinking' Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. MSFTMicrosoft Corp$415.571.45%Overview Rating:Speculative50%Technicals Analysis660100Financials Analysis400100WatchlistOverviewMarket News and Data brought to you by Benzinga APIs