Microsoft Chairman and Chief Executive Officer Satya Nadella said the historic surge in artificial\u2011intelligence infrastructure spending across the technology sector will generate strong returns, supported by software.<\/p>\n
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Speaking at the Morgan Stanley 2026 Technology, Media & Telecom Conference in San Francisco on March 4, Nadella argued that the current wave of investment\u2014spanning data centers, networking, compute and storage\u2014is part of a full-on upgrade of the global tech stack.<\/p>\n
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\u201cWe have to manage a capital-intensive business, but using all of the levers that software gives us in managing TCO, managing utilization, optimizing the kernels by workload, ensuring that there\u2019s a diverse class of customers\u2026 those are all the things that I think will generate great ROIC [return on invested capital], and this is probably unique,\u201d Nadella said in a fireside chat with Keith Weiss, who leads Morgan Stanley Research\u2019s software coverage in the U.S.<\/p>\n
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According to Morgan Stanley data, the world\u2019s largest technology companies\u2014including Microsoft\u2014have announced more than $700 billion in capital expenditures for 2026, up 69% from 2025. That increase has fueled worries among investors that big tech could be over\u2011building AI infrastructure, contributing to a selloff in tech stocks earlier this year.<\/p>\n
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Nadella compared today\u2019s debate to the doubts he faced early in his tenure as CEO. When he took over in 2014, Microsoft was ramping up spending to expand its cloud platform\u2014an investment that has since become a major growth engine.<\/p>\n
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\u201cWe knew there was going to be margin in that area, and we kept building,\u201d he said.<\/p>\n
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Software: Where CIOs and Investors Disagree<\/p>\n
Shares of the broader software industry posted roughly 20% declines in the first two months of the year amid fears that AI could disrupt traditional licensing and subscription models.<\/p>\n
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But new data from a Morgan Stanley AlphaWise survey suggests that corporate IT leaders remain confident. Chief Information Officers in the U.S. and Europe expect software budgets to grow 3.8% this year, slightly above the 3.7% pace in 2025, with most spending directed to Microsoft products.<\/p>\n
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The survey, conducted in the fourth quarter of 2025, also found that 80% of CIOs are either already using or plan to adopt Microsoft\u2019s Copilot AI assistant within the next 12 months\u2014a signal of enterprise demand for AI\u2011enhanced productivity tools.<\/p>\n
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Nadella said the industry is still early in understanding how best to deploy AI at scale.<\/p>\n
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\u201cAI is not yet fully cracked,\u201d he noted, emphasizing that software remains essential to improving AI efficiency and usability.<\/p>\n","protected":false},"excerpt":{"rendered":"Microsoft Chairman and Chief Executive Officer Satya Nadella said the historic surge in artificial\u2011intelligence infrastructure spending across the…\n","protected":false},"author":2,"featured_media":826,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[151],"tags":[594,1169,1168,1167,1165,1166,1170,585],"class_list":{"0":"post-825","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-satya-nadella","8":"tag-ai","9":"tag-ai-models","10":"tag-application-layers","11":"tag-capex","12":"tag-cloud","13":"tag-data-centers","14":"tag-keith-weiss","15":"tag-satya-nadella"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@people\/116327672870064798","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/posts\/825","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/comments?post=825"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/posts\/825\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/media\/826"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/media?parent=825"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/categories?post=825"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/tags?post=825"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}