Microsoft CEO Satya Nadella has a formula to gauge the long-term success of AI investments

Ask not what Microsoft can do for AI, but what AI can do for global productivity.

Microsoft CEO Satya Nadella, speaking at Madrona‘s 2025 annual meeting in Seattle, explained how he’s assessing the company’s long-term investments in AI, as an alternative to focusing on technical benchmarks to determine when human-like Artificial General Intelligence (AGI) has been achieved.

“My formula for when can we say AGI has arrived? When, say, the developed world is growing at 10%, which may have been the peak of the Industrial Revolution,” Nadella said. “That’s a good benchmark for me.”

Nadella has referenced the link between AI and global productivity in recent podcasts and interviews, but he was more detailed and specific in his conversation with S. “Soma” Somasegar, a Madrona managing director and former Microsoft Developer Division leader. The session was recorded last week and released by the Seattle-based venture capital firm on YouTube this morning.

To put his comments about 10% growth into perspective, U.S. Gross Domestic Product increased 2.8% in 2024, according to the U.S. Bureau of Economic Analysis.

Microsoft is investing $80 billion in new AI infrastructure this year. Google, Amazon, and others are also significantly increasing their capital expenditures, betting that AI demand will continue despite — or perhaps even due to — the increases in efficiency for AI training demonstrated in recent months by DeepSeek and others.

Nadella said the “social permission” for companies like Microsoft to invest huge sums in AI, from markets and broader society, should “come from our ability to have broad sectoral productivity gains that’s evidenced in economic growth.”

Watch the full video above, including topics such as Nadella’s early vision as Microsoft CEO, the company’s cultural transformation, lessons in leadership, and how team sports like cricket shaped his approach to building teams.