Microsoft CEO Satya Nadella says Bill Gates told him his big bet on OpenAI would be a flop: 'Yeah, you’re going to burn this billion dollars'

In a recent interview, Microsoft CEO Satya Nadella shared insights into the company’s early investment in OpenAI, a move that has since proven to be a monumental success. However, the journey to this point was not without its challenges and skepticism, even from within Microsoft itself.

The Initial Investment in OpenAI

In 2019, Microsoft made a bold decision to invest $1 billion in OpenAI, which at the time was a nonprofit organization. This investment was part of a strategy to enhance Microsoft’s capabilities in artificial intelligence (AI) and to promote its Azure cloud services. Nadella recalled that even Bill Gates, the co-founder of Microsoft and its original CEO, expressed doubts about the investment. Gates reportedly told Nadella, “Yeah, you’re going to burn this billion dollars.”

Overcoming Doubts

Despite the pushback from Gates and others, Nadella and his team were not deterred. He explained that while the investment required board approval due to its size, the potential of AI was too significant to ignore. Nadella emphasized that the team had a “high risk tolerance” and believed it was worth pursuing. “We want to go and give this a shot,” he stated, highlighting the determination to explore the possibilities of AI.

The Evolution of OpenAI

Fast forward to today, and OpenAI has become the world’s most valuable private company. Nadella noted that the initial investment laid the groundwork for Microsoft to eventually invest a total of $13 billion in OpenAI. This partnership has not only benefited Microsoft financially but has also reinforced its position in the competitive AI landscape.

Financial Gains from the Partnership

In October 2025, Microsoft began to see significant returns from its investment when OpenAI restructured its business model. As part of this restructuring, Microsoft acquired a 27% stake in OpenAI, valued at approximately $135 billion. Additionally, OpenAI agreed to purchase $250 billion worth of Azure services over time, further solidifying the partnership.

Impact on Microsoft’s Revenue

By January 2026, Microsoft reported that OpenAI had contributed an impressive $7.6 billion to its net income. This financial success was bolstered by a reworked deal that allowed OpenAI more flexibility in sourcing its computing power, including from other providers beyond Microsoft. This move was seen as a strategic pivot that would help OpenAI scale its operations effectively.

Bill Gates’ Changing Perspective

Interestingly, despite his initial skepticism, Bill Gates has since expressed admiration for the rapid advancements in AI technology. In a recent appearance on The Tonight Show, Gates remarked on the transformative potential of AI, suggesting that many tasks currently performed by humans would eventually be automated. He stated, “There will be some things we reserve for ourselves, but in terms of making things and moving things and growing food, over time those will be basically solved problems.”

The Future of AI and Microsoft

As Microsoft continues to invest in AI, the company is poised to lead in this transformative field. The partnership with OpenAI exemplifies how strategic investments can yield significant returns and drive innovation. Nadella’s willingness to take risks, despite initial doubts, has positioned Microsoft as a key player in the AI revolution.

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Note: The information presented in this article is based on the latest developments in the tech industry as of October 2023.