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Microsoft’s strategic reset echoes a broader shift across the tech industry, as major players confront the economic realities of AI at scale.
Satya Nadella, Microsoft CEO
Satya Nadella is pushing Microsoft into a full-scale rethink of its business model for the AI age, tapping Rolf Harms- the strategist whose 2010 “Economics of the Cloud” white paper helped drive the company’s cloud transformation- to lead the next wave of economic and structural overhauls.
In a memo sent to top executives and reported by Business Insider, Satya Nadella said Microsoft must “rapidly rethink the new economics of AI across the company- just as we once did with the cloud,” describing the shift as the creation of an entirely new “AI factory” and a unified stack of Copilots and agentic systems. Rolf Harms, now a corporate vice president under Cloud + AI chief Scott Guthrie, will work closely with Satya Nadella to redefine how Microsoft allocates capital, builds infrastructure and monetises AI across its products.
Microsoft’s renewed urgency comes at a moment of growing investor scrutiny over whether multi-billion-dollar AI investments can deliver sustainable returns. After briefly slowing AI-related spending earlier this year, the company has again accelerated commitments, signing significant new agreements with OpenAI and Anthropic.
How Other Tech Giants Are Redrawing Business Models For AI
Microsoft’s strategic reset echoes a broader shift across the tech industry, as major players confront the economic realities of AI at scale. Google CEO Sundar Pichai has been warning employees that the company is entering an “intense” phase of AI competition heading into 2026. Sundar Pichai has also cautioned that AI systems remain error-prone and that the sector must guard against an emerging “AI bubble,” signalling that Google, like Microsoft, is bracing for massive structural change.
IBM, meanwhile, is shifting its business toward specialised, domain-specific AI rather than competing in the foundation model race. Its roadmap emphasises deeply embedded enterprise AI- automating workflows, transforming operations, and deploying trusted, industry-targeted models.
Nvidia, the company powering much of the world’s AI boom, is also rethinking its positioning. Beyond GPUs, it is building full AI systems spanning chips, software platforms and cloud services, while expanding domestic manufacturing to secure long-term supply. With next-generation chips like Blackwell and Rubin aimed at robotics, industrial AI and real-time agents, Nvidia is positioning itself to control the AI stack end-to-end.
Delhi, India, India
November 25, 2025, 12:33 IST
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