Microsoft CEO Admits That AI Is Generating Basically No Value

Microsoft CEO Satya Nadella, whose company has invested billions into OpenAI, is pushing back against the relentless hype surrounding artificial intelligence. In a recent conversation on Dwarkesh Patel’s podcast, Nadella emphasized the need to measure AI’s impact based on tangible economic growth rather than chasing abstract milestones like artificial general intelligence (AGI).

Dismissing self-proclaimed AGI breakthroughs as mere “nonsensical benchmark hacking,” Nadella urged the industry to focus on AI’s real-world value. He argued that if AI were truly revolutionary, it should already be driving significant economic growth, akin to historical industrial revolutions.

“The real benchmark is: the world growing at 10 percent,” Nadella stated. “Suddenly productivity goes up and the economy is growing at a faster rate. When that happens, we’ll be fine as an industry.”

However, the present reality tells a different story. AI systems, including OpenAI’s top models, still struggle with slow performance and require heavy supervision. Despite grand claims from figures like OpenAI CEO Sam Altman, AI has yet to deliver the seismic economic transformation many anticipate.

Tech giants, including Microsoft, have poured billions into AI, yet the expected productivity boom remains elusive. Compounding concerns, Chinese AI startup DeepSeek recently demonstrated that high-quality AI models can be developed at a fraction of the cost, triggering a $1 trillion market shakeup. Meanwhile, persistent technical flaws—such as AI-generated “hallucinations” and cybersecurity risks—continue to cast doubt on its immediate viability.

Nadella’s comments suggest Microsoft may be trying to manage expectations, advocating for a more grounded perspective on AI’s capabilities. Yet, his actions tell a different story. Microsoft has funneled $12 billion into OpenAI and is backing the ambitious $500-billion “Stargate” initiative alongside Sam Altman. When questioned about this massive financial commitment, Nadella stood firm.

“All I know is I’m good for my $80 billion,” he told CNBC, responding to Elon Musk’s skepticism over OpenAI’s funding.