Microsoft to Expand Quantum Computing Capabilities Amid $30B Capex for AI and Quantum Workloads.

Microsoft CEO Satya Nadella expects quantum computing to be the next major driver of cloud growth. The company has deployed a Level 2 quantum computer in partnership with Atom Computing and plans to build a new machine called Magne with over 1,200 physical qubits. Microsoft is investing $30 billion in AI and quantum workloads, with Azure revenue rising 39% YoY in Q4. The company's cloud-based data platforms, Azure AI Foundry and Microsoft Fabric, are also gaining traction.

Microsoft CEO Satya Nadella has identified quantum computing as the next major accelerator for cloud technology, signaling a significant shift in the company's long-term strategic focus. During the company's fiscal year 2025 fourth-quarter earnings call, Nadella highlighted the potential of quantum computing to reshape infrastructure and workloads, positioning it as a critical platform for future growth [1].

Microsoft has made significant strides in this area by deploying a Level 2 quantum computer in partnership with Atom Computing. This operational deployment marks a crucial milestone, as a Level 2 quantum computer can implement quantum error correction and preserve logical qubits over time [1]. The company is also planning to build a new machine called Magne with over 1,200 physical qubits, further underscoring its commitment to advancing quantum technology [1].

In addition to its quantum initiatives, Microsoft is investing heavily in AI and quantum workloads. The company has committed $30 billion to these areas, reflecting its long-term vision for the future of computing. Azure revenue rose 39% year-over-year in Q4, driven by strong growth in cloud services, particularly Azure [1].

Microsoft's cloud-based data platforms, Azure AI Foundry and Microsoft Fabric, are also gaining traction. Azure AI Foundry supports over 500 trillion tokens served annually, while Microsoft Fabric reported 55% revenue growth and over 25,000 customers [1]. These platforms are integral to Microsoft's strategy for embedding AI and quantum technologies into its growing data center footprint.

Looking ahead, Microsoft expects continued double-digit growth in revenue and operating income for fiscal 2026. The company projects continued Azure strength and estimates Q1 Azure revenue growth of 37% [1]. While AI infrastructure demand is likely to outpace supply in the near term, Microsoft is confident in its ability to scale and define the architecture of a new era of computing shaped by AI and quantum technologies.

References:
[1] https://thequantuminsider.com/2025/07/31/microsoft-ceo-sees-quantum-as-next-big-accelerator-in-cloud-ramps-up-ai-deployment/