When Microsoft first invested $1 billion in OpenAI in 2019, the move was far from a guaranteed success. In fact, Microsoft CEO Satya Nadella now says even cofounder Bill Gates questioned the decision.
Speaking on the tech-focused YouTube channel TBPN, Nadella recalled the skepticism surrounding the early investment.
“Remember this was a nonprofit, and I think Bill [Gates] even said, ‘Yeah, you’re going to burn this billion dollars,’” Nadella said.
At the time, OpenAI was still a relatively unknown research organization. Today, it stands as the world’s most valuable private company. But in 2019, the outcome was uncertain, and Nadella faced internal scrutiny given the scale of the commitment.
Despite the pushback, Nadella said the leadership team believed artificial intelligence represented a critical strategic frontier. While formal board approval was required due to the size of the investment, he described the broader case for AI as compelling.
“It was not that hard to convince anyone that this is an important area,” Nadella said. “We kind of had a little bit of high risk tolerance, and we said, ‘We want to go and give this a shot.’”
At the time, Microsoft saw the partnership as an opportunity to strengthen its position in AI and accelerate the growth of its Azure cloud platform. What no one anticipated, Nadella acknowledged, was just how transformative that initial investment would become. Microsoft has since committed roughly $13 billion to OpenAI.
“In retrospect, who would have thought?” Nadella said. “I didn’t put in a billion dollars saying, ‘Oh yeah, this is going to be a hundred bagger.’”
Microsoft began seeing major returns after OpenAI restructured in October, granting Microsoft a 27% stake in the company — reportedly valued at approximately $135 billion. Although Microsoft gave up its cloud exclusivity arrangement with OpenAI, the companies reached a new agreement under which OpenAI is expected to purchase up to $250 billion in Azure services over time.
By January, Microsoft reported that OpenAI had boosted its net income to $7.6 billion. Under a revised deal, OpenAI is expected to share 20% of its revenue with Microsoft through 2032. The new structure also gives OpenAI greater flexibility in sourcing computing power from providers beyond Microsoft, according to reporting by The Information.
Gates, who once expressed doubts about the billion-dollar gamble, has since spoken more enthusiastically about artificial intelligence and its rapid progress.
During an appearance on The Tonight Show last year, Gates told host Jimmy Fallon that AI could eventually handle most human tasks.
“There will be some things we reserve for ourselves,” Gates said. “But in terms of making things and moving things and growing food, over time those will be basically solved problems.”
What began as a high-risk investment in a nonprofit research lab has evolved into one of the most consequential technology partnerships of the decade — reshaping Microsoft’s strategy and accelerating the global AI race.
