Nadella: Microsoft expected $92B return on OpenAI stake

At a federal trial in Oakland, Microsoft CEO Satya Nadella testified that a January 2023 memo from Microsoft President Brad Smith projected a $92 billion return on the company’s cumulative $13 billion investment in OpenAI. Nadella told the jury, “It has worked out well because we took the risk.” Court filings estimate Microsoft’s 27% stake in OpenAI at about $135 billion; OpenAI was last valued at about $852 billion after a $122 billion funding round in March.

The testimony came in a lawsuit brought by Elon Musk, who alleges Microsoft steered OpenAI toward commercial profit in ways that violated the nonprofit’s charter. Musk is seeking between $79 billion and $134 billion in damages. His legal team called Nadella as their first witness and introduced internal Microsoft documents into evidence.

Microsoft’s investments in OpenAI began with an initial $1 billion in 2019, increased in 2021, and included a $10 billion follow-on commitment announced in early 2023. The Brad Smith memo tied the $92 billion projection to value created by the 2023 funding round.

Nadella testified that he had warned internally against a scenario in which a large partner becomes only an infrastructure provider while a startup captures most of the upside. An internal email entered into evidence showed Nadella wrote that he did not want Microsoft to become IBM while OpenAI became the next Microsoft.

Under cross-examination, Nadella testified that he was not aware of any full-time employees at the OpenAI nonprofit before March 2026, nor of grants, research outputs, or open-source technology from that nonprofit. Microsoft attorney Jay Jurata reviewed three milestones-the 2019 announcement, a 2020 exclusive license for GPT-3, and the 2023 $10 billion investment-and asked whether Musk had objected. Nadella answered that he had not and noted he and Musk have each other’s phone numbers.

OpenAI CEO Sam Altman is expected to testify next, followed by closing arguments. An advisory jury could deliver a recommendation the week of May 18, after which U.S. District Judge Yvonne Gonzalez Rogers will issue the final ruling. The judge dismissed Musk’s fraud claims before trial, leaving counts of breach of charitable trust and unjust enrichment. OpenAI listed the lawsuit as a risk to its business in investor disclosures earlier this year.

Other court testimony included OpenAI co-founder Greg Brockman, who testified about 2017 diary entries referencing ‘making money for us’ and alleged that Musk physically threatened him in 2017 after a dispute over majority control. Microsoft denies any wrongdoing. OpenAI characterized the lawsuit as “baseless harassment” and linked it to competition from Musk’s AI venture.