You'll Never Believe What Microsoft CEO Satya Nadella Said About Quantum Computing

Key Points

• Microsoft announced work on its Level 2 quantum computer earlier this summer.

• Quantum computing revenue may be drowned out by other Microsoft divisions in the future.

• 10 stocks we like better than Microsoft ›

Quantum computing could be the next great step for computing power. Currently, graphics processing units (GPUs), such as those made by Nvidia, are the most powerful computing devices available that aren't dedicated to a single task. While these devices certainly aren't expected to go obsolete, they could be supplemented by quantum computing, and the future looks to be growing brighter for the technology.

Tech giant Microsoft (NASDAQ: MSFT) had some positive things to say about quantum computing, and it could start to make stocks in this industry more attractive to investors. But is now the right time to buy quantum computing stocks?

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CEO Satya Nadella is excited about the future of quantum computing

During Microsoft's Q4 FY 2025 (ending June 30) earnings call, CEO Satya Nadella had this to say about quantum computing:

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.

This quote tells investors a few things. First, cloud computing is a big deal for Microsoft. At its core, the cloud computing industry is essentially one company building excess computing power and renting it out to clients that need more computing power.

This has two main use cases: First, when a company doesn't want to handle storing data on its own servers or wants to run workloads on the cloud rather than in-house. Businesses are starting to move more and more of their data to the cloud, and companies like Microsoft and its Azure cloud computing product stand to benefit.

The second big use case for cloud is for heavy workloads, such as artificial intelligence (AI) model training. Many companies utilize Azure to run AI workloads on it because they don't have the funds to justify building their own supercomputer. This has been a huge growth driver for Azure in recent quarters, and is one of the primary reasons why Azure's growth rate was 39% in the latest quarter.

The second item this quote tells us is that Microsoft is getting closer to having useful quantum computing. Microsoft states that its Level 2 computer will have resilient logical qubits. This stage will be focused on eliminating background noise and delivering a product that can produce reliable results. Once it completes its Level 2 activities, it will move to Level 3, which involves achieving scale and producing quantum supercomputers.

Once that last stage is complete, it could usher in a brand-new arms race, and if Microsoft is the first to offer this computing power to its clients, it could give it a huge head start over the competition.

But what kind of growth can investors expect?

Quantum computing may not have the effect on its stock that some expect

We're still a few years out from seeing quantum supercomputers on the market. Most companies point to 2030 as a key turning date for quantum computing, so investors shouldn't expect to see any major uses before that date.

After that, there are many estimates as to what the quantum computing market will look like. Rigetti Computing points to a projection that states the annual value for quantum computing will be between $15 billion and $30 billion annually starting in 2030.

Considering Microsoft's Intelligent Cloud division generated nearly $30 billion in Q4 alone, quantum computing likely won't be a huge growth driver for Microsoft. Companywide, Microsoft's revenue was $76.4 billion in Q4, so if Microsoft dominates the quantum computing market and Rigetti's market prediction comes true, quantum computing won't be a massive growth driver.

The only real explosive growth in the quantum computing realm is if one of the pure plays (such as Rigetti Computing) turns out to be a winner. If a giant like Microsoft rises to the top, it will be just another business unit adding more revenue to the tech giant.

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Keithen Drury has positions in Nvidia. The Motley Fool has positions in and recommends Microsoft and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.