• Microsoft CEO Satya Nadella said "a lot" of tokenmaxxing is happening at Microsoft.
• He said workers should use the right AI model for the job.
• Nadella said he vibe-coded a tool that updates code from workplace chats.

Satya Nadella has a message for Microsoft's AI-pilled employees: Not every problem needs the most powerful AI model.

At a live taping of The New York Times' "Hard Fork" podcast, Microsoft's CEO was asked how much tokenmaxxing is happening inside the company.

"A lot," Nadella said, before cohost Casey Newton could finish the question.

"I'm a tokenmaxxer too, it's addictive," Nadella said. "But you have to step back when the novelty wears off to say, 'What is it that I'm trying to create?'"

Silicon Valley executives have spent the past year pushing workers to use AI as much as possible, sometimes through internal leaderboards that track tokens, the units of data processed by AI systems. Now that the bills are due, companies are putting AI use on a diet.

Nadella did not say Microsoft is limiting employees' AI use, but he said workers should use the right model for the job.

"Don't use frontier models for non-frontier problems," Nadella said, pointing to Microsoft Copilot's auto mode, which is designed to match tasks with the model most appropriate for it. "Let's kind of match these things such that you get the outputs, you get the economics — it can't be a race to doing things that just don't add value."

Nadella added that he recently vibe-coded a tool that keeps a software project up to date by following related workplace conversations. If employees discuss a change connected to the project, the AI can create a plan, make the update, and keep the code working without Nadella needing to be in the meeting or thread.

Nadella has been working to remake Microsoft for the AI era and turn the 220,000-person company into one that can compete with smaller, faster rivals.

In October, he appointed a new CEO of Microsoft's commercial business, a move that freed him up to spend more time on technical work. In November, he tapped a new AI advisor to help rethink the company's business model for the AI era.

During the live event, cohost Kevin Roose presented Nadella with what he called a "piece of rare merchandise": a T-shirt that read "Microsoft Advanced AI Research." Roose said he had acquired it from an OpenAI employee who had it made in 2023, when Sam Altman was briefly ousted, and Microsoft was preparing to create a new AI lab for OpenAI employees. Altman was reinstated days later, and the lab was never created.

Nadella, laughing, accepted the T-shirt.