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Microsoft CEO Satya Nadella believes OpenAI might become one of the defining companies of our time.

In a wide-ranging conversation with investors Bill Gurley and Brad Gerstner, Nadella explained that “OpenAI is in some sense the Google, Microsoft, or Meta of this era,” suggesting that the company could shape the AI landscape in the same way those tech giants defined previous generations of computing.

Nadella believes that the early collaboration with OpenAI has given Microsoft a significant edge in the AI race. “We’ve had two years of runway pretty much uncontested,” Nadella explained. “I don’t think there will be ever again maybe a two-year lead like this.”

According to Nadella, the alliance has already helped Microsoft win big cloud customers like Shopify, Stripe, and Spotify – companies that previously used AWS or Google’s services. OpenAI itself has become a relevant cloud customer for Microsoft, Nadella said.

Nadella also chimed in on OpenAI’s new partnership with Apple, which he now seems to welcome, likely because it could boost Microsoft’s cloud revenue even more.

“When Tim [Cook] finally did a deal with Sam [Altman], I was like the most thrilled person,” he said. “It’s better to have ChatGPT get that deal than anybody else because we have that commercial and investor relationship with OpenAI.”

However, sources suggest Nadella initially had reservations about the Apple deal, given Microsoft’s plans to expand its own Copilot services to end users.

As for OpenAI’s future structure, Nadella remains cautious about discussing the planned for-profit reorganization. While Microsoft wants to protect its interests, he said the priority is to maintain the commercial and intellectual property partnership while supporting OpenAI’s plans. The AI company is moving toward becoming a “public benefit corporation.”

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AI investments drive cloud growth

A significant portion of Microsoft’s multibillion-dollar investment in OpenAI flows back into Microsoft’s cloud business, as OpenAI uses Azure to train and run its models. This arrangement has helped fuel Azure’s growth, and in turn, Microsoft’s stock price. “We’re very interested in each other’s success,” Nadella said.

Other cloud providers are following a similar strategy, with Google and AWS investing in AI startups like Anthropic to boost their own cloud growth. While this approach is fueling short-term AI expansion, questions remain about whether these massive investments will pay off eventually.

Microsoft’s partnership with OpenAI has reportedly not been without its challenges, though Nadella doesn’t address those points in his interview with Gurley and Gerstner.

According to the New York Times, Microsoft reconsidered its investment strategy after OpenAI briefly fired CEO Sam Altman in November 2023. This led Microsoft to purchase the Inflection AI team from Deepmind co-founder Mustafa Suleyman for $650 million.

Meanwhile, OpenAI has expressed concerns about Azure’s capacity limitations. The company has sought additional resources elsewhere, securing a $10 billion deal with Oracle for computing power and raising $6.6 billion from other investors.

Sources say OpenAI is particularly worried about competition from Elon Musk’s xAI, which is rapidly building a massive supercomputer and has raised about $12 billion since May.