Satya Nadella, CEO of Microsoft, revealed that his initial $1 billion investment in OpenAI faced significant skepticism, even from the company’s founder and former CEO, Bill Gates. The revelation came during an interview on the tech-focused YouTube channel TBPN, highlighting the considerable risk Microsoft was willing to take on a then-nonprofit organization focused on artificial intelligence.
Gates reportedly questioned the wisdom of the investment, stating, according to Nadella, “Yeah, you’re going to burn this billion dollars.” Despite this concern, Nadella and his team remained convinced of OpenAI’s potential, viewing it as a crucial step towards establishing Microsoft’s foothold in the rapidly evolving field of AI and bolstering the capabilities of its Azure cloud platform. This initial bet has since blossomed into a partnership exceeding $13 billion, fundamentally reshaping the tech landscape.
The decision wasn’t without internal hurdles. Nadella acknowledged the need for board approval given the substantial financial commitment. However, he emphasized that convincing stakeholders of the investment’s importance wasn’t overly difficult, driven by a “high risk tolerance” and a belief in the transformative power of AI. “We kind of had a little bit of high risk tolerance and we said, ‘We want to move and offer this a shot,’” Nadella explained.
The initial investment in 2019 proved to be remarkably prescient. Microsoft’s stake in OpenAI has grown to 27%, valued at approximately $135 billion as of October 2025, following a restructuring of the partnership. The company also secured a deal where OpenAI will purchase $250 billion worth of Azure services over time, demonstrating the deepening synergy between the two tech giants. This financial boost for Microsoft was evident in its January report, which indicated OpenAI contributed $7.6 billion to the company’s net income.
However, the relationship isn’t without its evolving dynamics. A recent agreement, reported by The Information, allows OpenAI greater flexibility in sourcing compute power, potentially from competitors to Microsoft Azure, while still committing to a revenue-sharing model where OpenAI will pay 20% of its revenue to Microsoft through 2032.
From Skeptic to Impressed: Gates’ Evolving View of AI
Interestingly, Bill Gates’ initial reservations about OpenAI appear to have shifted as AI technology has rapidly advanced. In a 2024 appearance on The Tonight Show Starring Jimmy Fallon, Gates predicted a future where AI significantly reduces the need for human labor in many sectors. “There will be some things we reserve for ourselves,” he said, “But in terms of making things and moving things and growing food, over time those will be basically solved problems.”
This perspective underscores the dramatic evolution of AI’s capabilities and its potential to reshape industries. While Gates initially questioned the financial viability of investing in a nonprofit AI research company, he now acknowledges the transformative potential of the technology. Microsoft’s early commitment to OpenAI, despite initial skepticism, has positioned the company at the forefront of this technological revolution.
The success of the Microsoft-OpenAI partnership is also being closely watched by other players in the AI space. Companies like Anthropic, positioned as a “safe” alternative to OpenAI, are facing their own challenges in balancing safety with profitability, as reported by various tech news outlets. The competitive landscape, highlighted by a recent Super Bowl ad war between OpenAI and Anthropic, demonstrates the high stakes involved in the race to dominate the AI market.
As AI continues to develop at an unprecedented pace, the collaboration between Microsoft and OpenAI will likely remain a key driver of innovation. The future will reveal the full extent of this partnership’s impact, but it’s clear that the initial, risky bet has already yielded substantial returns and reshaped the technological landscape.
What comes next for Microsoft and OpenAI will depend on navigating the evolving regulatory environment surrounding AI and continuing to push the boundaries of what’s possible with this transformative technology. Share your thoughts on the future of AI in the comments below.