Microsoft (MSFT) is making quantum computing a core part of its long-term cloud strategy. During the company’s fourth-quarter earnings call on July 30, CEO Satya Nadella said, “The next big accelerator in the cloud will be Quantum, and I am excited about our progress. In fact, earlier this month, we announced the world’s first operational deployment of a Level 2 quantum computer, in partnership with Atom Computing.”
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Level 2 quantum systems include error correction and can support logical qubits, which makes them more stable than earlier quantum machines. Microsoft’s deployment is seen as the first in-market system with this capability. The company also revealed plans to build a new machine called Magne with Atom Computing. Magne will use over 1,200 physical qubits to support 50 logical qubits. Construction is set to begin in fall 2025, with workloads expected in 2027.
Microsoft Expands AI and Quantum Stack With $30B Capex
Unlike peers such as Alphabet (GOOG) and International Business Machines (IBM), Microsoft is focused on neutral atoms instead of superconducting chips. The partnership with Atom Computing fits into the company’s broader bet on scalable and fault-tolerant hardware.
Microsoft said its capital spending would reach $30 billion this year, mainly to support AI and quantum workloads. The company has built over 400 data centers globally and added liquid cooling in each Azure region. Azure revenue rose 39% year-over-year in the quarter. Total revenue reached $76.44 billion, while earnings per share came in at $3.65.
Microsoft is also layering its quantum work into Azure AI Foundry and Microsoft Fabric, its cloud-based data platforms. Fabric posted 55% year-over-year growth and now supports over 25,000 customers. OpenAI’s use of Microsoft tools continues to deepen, including Cosmos DB and Azure PostgreSQL for ChatGPT operations.
What Is the Price Target for MSFT Stock?
On the Street, Microsoft continues to boast a Strong Buy consensus rating, with an average MSFT stock price target of $617.58. This implies a 17.83% upside from the current price.
