Satya Nadella emphasizes AI as the fourth major platform shift, following client-server, web/internet, mobile, and cloud.
The rapid diffusion of AI is due to its compounding effect, building on previous platforms; for example, the cloud enabled the creation of AI supercomputers and models.
AI workloads are distinct from previous cloud workloads, leading to a "golden age of system software" and new opportunities at infrastructure, model, and product layers.
The ultimate benchmark for AI is its ability to drive economic and GDP growth by creating surplus in communities, industries, and companies.
A key question is whether AI models function like SQL (a foundational layer) or as complete SaaS applications.
Nadella views the model layer as having a "SQL moment," providing a stable platform for building sophisticated products using inference-time compute and tool calling.
The "app server" functionality, including the feedback loop and data path for post-training and tool selection, is crucial for sophisticated application creation.
The potential for intelligence to scale with compute raises concerns about energy consumption, with AI potentially doubling the current 2-3% energy use in the United States.
Gaining "social permission" to use this energy requires AI to create demonstrable social and economic surplus.
The tech industry's challenge is to prove that AI is leading to real, measurable improvements in areas like healthcare, education, and productivity, not just AGI benchmarks.
AI can streamline public services and healthcare workflows, for example, by simplifying patient discharge processes, thereby reducing costs and freeing up professionals' time for patient care.
The primary rate limiter for AI deployment is "change management," as AI fundamentally alters workflows and job scopes, much like email and spreadsheets transformed pre-digital forecasting.
Jobs will evolve (e.g., "full stack builders" at LinkedIn), requiring new roles and team structures.
"Forward deployment engineers" are crucial for helping customers understand and integrate AI into their specific workflows.
A significant opportunity for product creators is to eliminate the "drudgery" in knowledge work, allowing individuals to focus on higher-order reasoning and synthesis.
The field is rapidly evolving, with unexpected advancements in reinforcement learning (RL) and test-time compute.
Nadella is interested in new algorithmic breakthroughs that could change the current AI paradigm.
He anticipates the next step being a more integrated end-to-end training loop for response reasoning models, potentially leading to another scaling law breakthrough.
AI is fundamentally a "tool" and not an attempt to anthropomorphize or replicate human thought; human agency remains central.
The next frontier for sophisticated AI applications requires building "first-class" systems around models for memory, tool use, and "entitlements" (access control/business logic).
These systems enable the creation of agents with identity, management, and provisioning control.
The question is whether users will prefer "just-in-time" generated software over traditional packaged software.
Nadella believes both generated applications and prefabbed applications (with strong feedback loops to models) will coexist.
The role of a "software engineer" will transform into a "software architect," focusing on the meta-model of code, understanding change logs from AI agents, and ensuring quality.
Human oversight remains critical due to legal liability, necessitating tools for humans to understand and manage AI actions.
The tech industry is currently "overhyping" model capabilities.
The most important task is to earn "social permission" by demonstrating AI's tangible impact and social utility at scale.
The "underhyped story" is AI's ability to make a real difference in people's lives globally, such as a farmer in India using a chatbot for agricultural subsidies or Copilot improving education in developing regions.
If AI's impact is limited to valuations rather than real-world change, it will not end well.
Microsoft is excited about the integration of Copilot into Windows, akin to a modern "Clippy."
Copilot's vision and speech capabilities are creating a "new browser moment," fundamentally changing how users interact with existing computer form factors.
The long-term vision is for AI agents to become users' "computers," handling computing tasks for them.
Trust is paramount for delegation, encompassing precision, privacy, security, and sovereignty for users, organizations, and countries.
Nadella advises starting any journey with high ambition for personal impact, doing your best work in your current role rather than waiting for promotions.
Learning to work effectively in teams and making them successful is crucial, as this is a key difference between school and work.
He looks for three qualities in people:
Clarity: The ability to bring clarity to ambiguous and uncertain situations.
Energy Creation: The ability to bring people together and create positive energy across internal and external stakeholders.
Problem Solving: The skill to solve "over-constrained problems" by finding a path forward when things are stuck.
Leadership is about embodying these qualities at every stage of one's career.
Microsoft has invested in quantum computing for over 20 years, focusing on building a general-purpose, fault-tolerant quantum computer with stable, error-corrected qubits.
A significant physics breakthrough has been achieved with the fabrication of the Majorana particle, leading to a new chip.
Quantum computers are seen as the best way to understand the "language of nature" through simulation, as physics and nature are quantum.
AI is viewed as an "emulator" of this simulator, and the combination of high-performance computing (HPC), AI, and quantum is expected to accelerate advances in chemistry, physics, and material science.
Nadella's passion lies in creating the "next set of tools" that empower people, similar to the impact of Excel or VS Code.
He envisions tools that provide users with a sense of empowerment, analytical power, and a great user experience for roles like researchers, analysts, and creators.