Microsoft CEO warns AI could stall without global economic impact

AI's long-term success hinges on adoption beyond 'Big Tech', according to Satya Nadella

Microsoft chief executive Satya Nadella warned on Wednesday that Artificial Intelligence (AI) could falter in the coming market downturn unless it delivered real economic value across the wider world, the Financial Times reported.

Speaking at the World Economic Forum in Davos, Nadella said AI’s long-term success depended on its adoption beyond the technology sector and affluent economies. His remarks come amid growing concerns that the current AI boom may be unsustainable if its benefits remain concentrated among a few firms.

Nadella said the technology must be applied in sectors such as healthcare, education, agriculture, and public services to demonstrate that it could improve outcomes for ordinary people. He told the forum that if AI’s advantages were only seen in Silicon Valley and wealthy nations, it could become akin to a financial bubble rather than a force for broad productivity growth.

An AI bubble is thought to emerge when investors pour money into the sector based on expectations rather than proven financial performance.

Record spending, soaring valuations of AI-related companies, and comparisons to past tech manias like the dot-com era have fuelled these concerns. Market watchers, economists, and popular YouTubers have debated whether an AI bubble exists. The rapid rise in AI investment is contributing to a cycle where investment outpaces actual economic returns.

Read: AI: bubble, rubble and trouble

Companies tied to AI have been trading at high valuation multiples relative to earnings, and investor optimism sometimes appears detached from current revenue-generation realities. A July MIT study indicates that many enterprise AI projects have yet to deliver measurable productivity gains at scale, potentially slowing their contribution to economic growth if expectations remain high.

However, some economists, including the Head of Portfolio Management at JP Morgan, argue that while caution makes sense, the foundations of AI growth remain solid, with profitability and long-term demand supporting valuations in many cases.

“AI has to be used to change outcomes for people, communities, and industries,” Nadella said, arguing that democratising access to AI tools will determine which countries and companies lead in the next phase of technological change.

Nadella also echoed concerns from other industry figures that the divide in AI adoption between rich and developing nations risks widening global inequality. He cited early use cases — such as AI systems helping rural workers access information — as examples of how the technology could drive inclusive growth if deployed responsibly.