At Madrona’s 2025 Annual Meeting in Seattle, Microsoft Chairman and CEO Satya Nadella sat down with Madrona Managing Director Soma Somasegar for an in-depth discussion on AI, Microsoft’s evolving infrastructure strategy, and the economic potential of artificial intelligence.
Addressing an audience of entrepreneurs, investors, and technology executives, Nadella reflected on Microsoft’s cultural shift, its expanding AI investments, and how AI should be measured not just by its capabilities, but by its ability to accelerate economic growth.
AI as an Economic Growth Driver
During the conversation, Nadella reinforced his view that AI’s success should be determined not just by technological milestones, but by its tangible impact on global productivity. He argued that AI’s true significance lies in its ability to drive sustained economic growth, particularly in developed economies where growth rates have stagnated.
According to Nadella, the measure of AI’s success will not be in individual product advancements or automation efficiency but in whether it can push economic growth rates in developed nations to double-digit levels. He suggested that AI has the potential to be as transformative as the Industrial Revolution, fundamentally altering how businesses operate and economies function.
Beyond productivity gains, he highlighted the need for AI to create entirely new economic models rather than just improving existing systems. He referenced Microsoft’s origins and how the company’s early success was driven by a vision that extended beyond immediate technological advancements.
“In 2014 when I became CEO, my frame was very simple… I felt one of the things as a non-founder was to make first class again what founders do—having a real sense of purpose and mission,” Nadella said.
One of the key topics in the discussion was Microsoft’s strategic partnership with OpenAI. Since 2019, Microsoft has invested nearly $14 billion in OpenAI, integrating its models into Microsoft 365 Copilot.
He tied this philosophy directly to AI, explaining that for companies to benefit from AI at scale, they must adopt a “learn-it-all” culture rather than a “know-it-all” mentality. He explained that Microsoft’s cultural shift under his leadership—from a rigid corporate hierarchy to an organization focused on continuous learning—has been central to its ability to navigate the AI revolution. This shift, he argued, is as critical to Microsoft’s AI strategy as any technological investment.
One of the key topics in the discussion was Microsoft’s strategic partnership with OpenAI, which Nadella positioned as part of a broader effort to ensure AI is developed in a way that maximizes its economic impact. Since 2019, Microsoft has invested nearly $14 billion in OpenAI, integrating its models into Microsoft 365 Copilot and expanding AI-driven capabilities across its cloud ecosystem. He framed this investment not just as a technological bet, but as a commitment to building an AI-driven economy that generates real value beyond automation.
Microsoft’s Complicated Partnership with OpenAI
OpenAI has recently been diversifying its cloud computing partnerships, leading to the launch of the $500 billion Stargate Project.
OpenAI’s cloud expansion is largely due to its increasing compute demands surpassing Azure’s available capacity. As a result, the company has secured agreements allowing it to source compute power from alternative providers when Microsoft is unable to meet its needs. Nadella, however, previously downplayed concerns about OpenAI shifting away from Azure, stating:
“OpenAI APIs are exclusive to Azure going forward even, so nothing changes there… OpenAI has committed to Azure in a very significant way.”
Despite this reassurance, Microsoft has also been broadening its AI strategy by diversifying beyond OpenAI.
The company has integrated Anthropic’s Claude into GitHub Copilot and is actively developing own language models like Phi-4. These moves suggest Microsoft is ensuring AI innovation within its ecosystem remains robust, regardless of OpenAI’s long-term trajectory.
Beyond AI, Nadella during the interview spoke about Microsoft’s internal transformation. He reflected on how he reshaped the company’s culture, shifting from a “know-it-all” to a “learn-it-all” culture, emphasizing that a growth mindset is critical for long-term success.
“You have to have patience,” Nadella said. “You can’t come in the morning and say, ‘Hey, we need to have a growth mindset by evening.’”
Microsoft’s Decision to Pass on CoreWeave’s $12 Billion Deal
Microsoft recently opted not to exercise a $12 billion contract with CoreWeave. Instead, OpenAI secured an $11.9 billion deal with CoreWeave, ensuring it could expand beyond Azure.
This decision aligns with Microsoft’s broader move away from third-party AI infrastructure reliance. The company has also paused expansion and canceled multiple AI data center leases in response to shifting AI demand and infrastructure needs.
Microsoft is instead investing heavily in its own AI hardware, such as Azure Maia and Cobalt AI chips. These chips are designed to reduce reliance on Nvidia GPUs, which have faced global supply chain constraints.
Nadella has previously commented on Microsoft’s infrastructure strategy, stating, “All I know is I’m good for my $80 billion. I am going to spend $80 billion building out Azure. Customers can count on Microsoft with OpenAI models being there everywhere in the world, serving OpenAI models and other models.”
Microsoft is obviously betting on infrastructure control to maintain long-term AI dominance.
With OpenAI seeking greater independence and competitors like Google and Amazon ramping up their AI efforts, the next few years will be critical for Microsoft.
Whether AI-driven economic growth will come from centralized infrastructure control or a more decentralized cloud ecosystem remains an open question—one that will shape the future of artificial intelligence.
