Microsoft CEO Satya Nadella has stated that the world has yet to see any substantial economic benefits from the current AI hype and spending. He made these comments during a podcast interview, where he emphasized that the true measure of AI’s success should be its contribution to global economic growth, rather than its ability to complete obscure math puzzles or other arbitrary benchmarks. These challenges may be interesting in isolation, but they lack practical utility.
Nadella’s comments appear to be a direct message to the tech industry, cautioning against spreading hype about the concept of “artificial general intelligence” that could potentially replace humans in most tasks. He emphasized that such a scenario is unlikely and is an unnecessary distraction when the industry needs to focus on making money and delivering practical results. Microsoft is a primary backer of OpenAI, whose CEO Sam Altman has long stoked fears of AI taking over the world. Critics argue that Altman’s hype is primarily self-serving and aimed at maintaining control through regulatory capture.
Nadella stated, “If we’re going to have this explosion, abundance, whatever, commodity of intelligence available, the first thing we have to observe is GDP growth.” He further emphasized that the current hype surrounding AGI is premature and that the industry needs to focus on achieving Industrial Revolution-type growth. He suggested that 10% of inflation-adjusted growth attributed to AI would be a meaningful indicator of the technology’s impact.
Nadella also noted that the hundreds of billions being invested in AI companies today do not necessarily translate to real GDP growth, as there needs to be actual demand for the products being built. Otherwise, these companies will eventually crash and burn. He emphasized that it “can’t just be supply side” and that the industry needs to focus on creating practical applications that drive economic growth.
.@satyanadella on:
– why he doesn’t believe in AGI but does believe in 10% economic growth
– Microsoft’s new topological qubit breakthrough and gaming world models
– whether Office commoditizes LLMs or the other way around
Links below. Enjoy!
Timestamps
0:00:00 – Intro… pic.twitter.com/ywwCsPn1xd— Dwarkesh Patel (@dwarkesh_sp) February 19, 2025
Nadella’s comments seem to be an attempt to temper expectations while the AI industry remains highly active. Despite this, Microsoft continues to invest billions of dollars in competing in the AI race, having been an early backer of OpenAI and investing over $12 billion in the startup. Nadella justified massive infrastructure projects like OpenAI’s Stargate as necessary to bring the costs of AI down and support significant GDP growth. However, Microsoft has also allowed OpenAI to take infusions of cash from other sources and has been unwilling to supply all the compute resources the startup wants, suggesting a cautious approach.
Microsoft has been developing its own lower-cost models to supplement OpenAI’s ChatGPT. Across various industries, companies are struggling to implement the AI tools that have been built today, possibly due to discomfort with using AI for critical functions or uncertainty about how best to utilize it. The early reception of Microsoft’s Copilot, an AI agent for enterprises, has been underwhelming, with companies and even insiders at Microsoft complaining that 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 attention after its CEO said it would replace most of its customer support representatives with AI chatbots. However, the CEO recently walked back this claim, 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.
We just had an epiphany: in a world of AI nothing will be as valuable as humans!
Ok you can laugh at us for realizing it so late, but we are going to kick off work to allow Klarna to become the best at offering a human to speak to!!!
So excited about this, more to come!
— Sebastian Siemiatkowski (@klarnaseb) February 14, 2025
The AI industry continues to search for the ultimate unlock that will make AI truly “intelligent” and useful for a broad range of tasks, such as adding bots that can navigate a computer. However, language models can be described as supercharged autocomplete tools, prone to returning incorrect information because they are skilled at creating a facsimile of a human-written sentence—something that looks good—but chatbots 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.
However, the nature of chatbots to answer questions confidently even when they do not know the truth remains a problem, resulting in users spending significant time fact-checking the results or, worse, accepting what they return as fact and making decisions based on it. In this sense, Nadella is trying to bring the tech industry back down to earth and tell them to cut out the hype. AI safety is a concern, but it exaggerates how powerful these systems are. Eventually, the tech industry will have to demonstrate that the world is willing to invest real money in using these tools.
Currently, the use cases, such as 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 a potential correction similar to the dot-com boom. Nadella echoed similar concerns of a washout coming.
A lot of tech-savvy individuals on X are using chatbots frequently, but X is an echo chamber, and this usage is not reflected in the real world. ChatGPT claims more than 400 million active users, but this includes consumers on the free tier, who do not have the same mission-critical needs as businesses. Eventually, the check will come due, and the tech industry will have to demonstrate the practical value of AI.
