We’re used to Big Tech and Microsoft (MSFT) being deep in AI.
But now, Microsoft just made quantum feel a whole lot less sci-fi. CEO Satya Nadella isn’t pitching a pipe dream, and if you thought you’d have to wait decades, think again.
On Microsoft’s latest earnings call, Nadella hailed quantum as “the next big accelerator in the cloud,” and unlike most tech hype cycles, he came with receipts.
However, it was Azure’s 39% year-over-year growth that stole the show again, supercharged by surging AI workloads and sticky enterprise demand.
Investors focused on supply and not demand as the key limiter. Microsoft flagged a coming $30 billion capex surge in expanding data center capacity, responding to the AI-driven pressure on compute availability.
That massive bet is already paying dividends.
Microsoft Cloud’s mix continues to show off sticky migration trends, growing inference activity, and healthy adoption of AI tools like Copilot.
The software, infrastructure, and services flywheel is spinning faster each quarter.
Analysts took note.
KeyBanc upgraded the stock to Overweight, slapping a $630 price target, citing Microsoft’s robust ability to maintain double-digit top and bottom-line growth.
Mizuho and Melius Research chimed in, too, hailing MSFT stock a “must-own” as it inches closer to a $4 trillion market cap.
That said, over the past year, Microsoft stock has killed it, posting a 27% bump year-to-date, compared to just a 7.8% jump in S&P 500 returns.
Near-term momentum has also been impressive, with Microsoft boasting a 24% return, dwarfing broader-market gains.
Consequently, it’s now trading at remarkably lofty pricing multiples, at over 34 times non-GAAP earnings, roughly 8% higher than its five-year average.
Similarly, it’s trading at 12x forward sales, approximately 10% higher than its five-year average.
Microsoft’s quarterly call wasn’t simply about earnings, but signaled a major paradigm shift.
CEO Nadella used the July 30 earnings call to spotlight quantum as a now-now story.
“The next big accelerator in the cloud will be Quantum, and I’m excited about our progress,” he said.
That progress is far from being hypothetical.
Nadella grounded the claim with real-world momentum: “In fact, earlier this month, we announced the world’s first operational deployment of a Level 2 Quantum computer in partnership with Atom Computing.”
That July 2025 milestone effectively turned Microsoft’s quantum initiatives from a lab curiosity into a public inflection point.
He further said, “This is how we will continue to think and make investments, with decade-long arcs, while making progress every quarter.”
Microsoft is building Magne, a robust neutral-atom quantum system with Atom Computing. Construction begins in fall 2025, with early workloads targeted for 2027.
The effort blends Azure’s cloud exploits with Atom’s hardware, which is part of a bigger bet on fault-tolerant systems.
Across Big Tech, quantum is heating up just like the AI arms race.
Google and IBM are backing superconducting paths, and though Microsoft is chasing a different lane, the goals are converging.
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Nadella bets that Microsoft’s momentum in AI and cloud can effectively compound into quantum, and that bet just got a major signal boost.
The quantum computing industry has been building a healthy head of steam of late.
In June, Nvidia CEO Jensen Huang put it bluntly: “There’s an inflection point happening in quantum computing,” suggesting that hybrid quantum-classical systems could potentially offer real-world utility soon.
Billionaire tech magnate Bill Gates is even more bullish, predicting usable breakthroughs within three to five years.
On top of that, the economics are catching up to the breakthrough technology as well.
McKinsey’s 2025 Quantum Technology Monitor pegs the quantum ecosystem’s potential at a whopping $100 billion by 2035.
Similarly, Fortune Business Insights projects it could jump over $1 billion in 2024 to $12.6 billion by 2032, clocking a powerful compound annual growth rate of close to 35%.
Investors aren’t waiting for perfect conditions.
Cathie Wood’s ARK Invest is leaning into the space with its thesis: “The only way to predict the future is to invent it.”
Put simply, the framing around quantum is shifting at a breakneck pace.
