Microsoft CEO Satya Nadella is calling on the industry to think seriously about the real impact of artificial intelligence (AI) especially the amount of energy it uses. This comes as AI is quickly changing the tech world. Speaking at Y Combinator’s AI Startup School, he said that tech companies need to prove that AI is creating real value for people and society. “If you’re going to use a lot of energy, you need to have a good reason,” Nadella said. “We can’t just burn energy unless we are doing something useful with it.”

His comments come as AI is praised for pushing innovation forward, but also criticized for using massive amounts of electricity and possibly making social gaps worse. For Microsoft, one of the biggest companies building AI tools, this is a big concern. A report in 2023 estimated that Microsoft used about 24 terawatt-hours of power in a year. That’s as much electricity as a small country uses in the same time.

But Nadella believes AI should be judged by how well it helps people in real life. “The real test of AI,” he said, “is whether it can make everyday life easier—like improving healthcare, speeding up education, or cutting down on boring paperwork.”

He gave the example of hospitals in the U.S., where simple things like discharging a patient can take too long and cost too much. He said if AI is used for this task, it could save time, money, and energy.

Microsoft’s AI push comes with job losses

Even as Microsoft have big plans for AI, the changes have not come without a cost, especially for workers. Over the past year, the company has laid off more than 6,000 employees. Microsoft said these job cuts were part of “organisational changes” needed to stay strong in a fast-changing business world.

That fast-changing world is being shaped by artificial intelligence and cloud computing. Microsoft, working closely with its AI partner OpenAI, is putting AI at the center of its future plans. But as the company shifts toward more automation and AI-driven tools, it’s also reorganizing teams, often leading to people losing their jobs.