Nadella, who joined Microsoft in 1992, is executive vice president of Microsoft's Cloud and Enterprise group, responsible for building and running the company's computing platforms, developer tools and cloud services.
Microsoft spokesman Frank Shaw declined to confirm or deny the reports and did not immediately respond to a request for comment.
According to analysts, Microsoft has good reason for leaning towards a company man like Nadella as he is the cloud guru within Microsoft and it has been very successful over the past few years. Analyst Mark Moerdler, of Bernstein Research told MarketWatch said, "The real opportunity for Microsoft is in that they are moving to more cloud and subscription services. And here's a guy who does that.".