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.
Backing off of AGI
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.
