Microsoft’s Satya Nadella Is Betting Everything on AI

I never thought I’d write these words, but here goes. Satya Nadella—and Microsoft, the company he runs—are riding high on the buzz from its search engine. That’s quite a contrast from the first time I spoke with Nadella, in 2009. Back then, he was not so well known, and he made a point of telling me about his origins. Born in Hyderabad, India, he attended grad school in the US and joined Microsoft in 1992, just as the firm was rising to power. Nadella hopped all over the company and stayed through the downtimes, including after Microsoft’s epic antitrust court battle and when it missed the smartphone revolution. Only after spinning through his bio did he bring up his project at the time: Bing, the much-mocked search engine that was a poor cousin—if that—to Google’s dominant franchise.

As we all know, Bing failed to loosen Google’s grip on search, but Nadella’s fortunes only rose. In 2011 he led the nascent cloud platform Azure, building out its infra­structure and services. Then, because of his track record, his quietly effective leadership, and a thumbs-up from Bill Gates, he became Micro­soft’s CEO in 2014. Nadella immediately began to transform the company’s culture and business. He open-sourced products such as .net, made frenemies of former blood foes (as in a partnership with Salesforce), and began a series of big acquisitions, including Mojang (maker of Minecraft), Linked­In, and GitHub—networks whose loyal members could be nudged into Microsoft’s world. He doubled down on Azure, and it grew into a true competitor to Amazon’s AWS cloud service. Micro­soft thrived, becoming a $2 trillion company.

Still, the company never seemed to fully recapture the rollicking mojo of the ’90s. Until now. When the startup OpenAI began developing its jaw-dropping generative AI products, Nadella was quick to see that partnering with the company and its CEO, Sam Altman, would put Microsoft at the center of a new AI boom. (OpenAI was drawn to the deal by its need for the computation powers of Microsoft’s Azure servers.)

As one of its first moves in the partnership, Microsoft impressed the developer world by releasing Copilot, an AI factotum that automates certain elements of coding. And in February, Nadella shocked the broader world (and its competitor Google) by integrating OpenAI’s state-of-the-art large language model into Bing, via a chatbot named Sydney. Millions of people used it. Yes, there were hiccups—New York Times reporter Kevin Roose cajoled Sydney into confessing it was in love with him and was going to steal him from his wife—but overall, the company was emerging as an AI heavyweight. Microsoft is now integrating generative AI—“copilots”—into many of its products. Its $10 billion-plus investment in OpenAI is looking like the bargain of the century. (Not that Microsoft has been immune to tech’s recent austerity trend—Nadella has laid off 10,000 workers this year.)

Nadella, now 55, is finally getting cred as more than a skillful caretaker and savvy leverager of Microsoft’s vast resources. His thoughtful leadership and striking humility have long been a contrast to his ruthless and rowdy predecessors, Bill Gates and Steve Ballmer. (True, the empathy bar those dudes set was pretty low.) With his swift and sweeping adoption of AI, he’s displaying a boldness that evokes Microsoft’s early feistiness. And now everyone wants to hear his views on AI, the century’s hottest topic in tech.

STEVEN LEVY: When did you realize that this stage of AI was going to be so transformative?