Satya Nadella calls Microsoft's size a "massive disadvantage" in AI — is Nadella signalling more layoffs?

Even as speculations suggest that top AI labs like OpenAI and Anthropic have hit a wall due to a shortage of high-quality training data, hindering the development of more advanced models, the generative AI race remains fiercer than ever.

However, investors continue to raise concerns about the billions being plunged into the ever-evolving technology without a well-established profitability path. Microsoft co-founder Bill Gates warned of an AI bubble while comparing it to the dot-com era, where several internet-based companies became overvalued, leading to a significant crash.

Microsoft has arguably been at the forefront of advances and developments in the generative AI landscape, primarily due to its multibillion-dollar partnership with OpenAI, integrating next-gen capabilities across its tech stack.

Despite Microsoft’s massive bet on AI through heavy investments and deep integration across its product ecosystem, including Windows, which some speculate could evolve into an agentic operating system, CEO Satya Nadella appears to be grappling with the challenge of steering the software giant toward an AI‑driven future.

While speaking with Mathias Dpfner, CEO of Axel Springer, the executive admitted that he spends of of his weekends learning about how startups build and develop products. Nadella indicated that Microsoft's size "has become a massive disadvantage" as it tries to establish dominance in the AI space (via Business Insider).

According to the executive, startups are able to make informed decisions quickly because everyone involved in the product development process all sit at the same table. Perhaps more interestingly, Nadella seemingly shared a solution for this issue: unlearning old habits and techniques that once made companies successful and embracing new approaches.

It's interesting that Nadella makes these comments. Earlier this year, the executive indicated that Microsoft was moving away from Bill Gates' revolutionary software vision, which helped build and contribute to the company's immense success. He claimed that the approach might become obsolete in the AI era. Moving forward, Microsoft is poised to double down on security, quality, and AI transformation as its core business priorities.

Unfortunately, Nadella's comments could also be seen as a signal that more Microsoft layoffs are on the horizon, under the guise of "efficiency." Comments like the above may be laying the ground work. Our sources have suggested that there are rumors swirling internally of another round of early 2026 layoffs, even after 2025's massive 15,000 cuts — also reportedly inspired by AI.

For note, Microsoft CEO Satya Nadella's pay package hit $96.5 million this year.

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