Insider Brief
- Microsoft reported strong AI-driven growth in Q4 2025 and signaled quantum computing as its next long-term focus.
- AI services on Azure grew rapidly, with over 500 trillion tokens served annually and 100 million monthly users across Copilot apps.
- Microsoft deployed a Level 2 quantum computer with Atom Computing and upgraded all Azure regions with infrastructure to support future quantum workloads.
Microsoft’s latest earnings report confirmed what investors have come to expect: artificial intelligence is fueling the company’s rapid growth. But beneath the surface of strong cloud and AI numbers, CEO Satya Nadella suggested another shift is underway: Quantum computing may be the company’s next big bet.
In its fiscal year 2025 fourth-quarter earnings call, Microsoft reported $76.4 billion in revenue, up 18% year-over-year, and earnings per share of $3.65, beating expectations. Much of that performance was driven by Azure, Microsoft’s cloud platform, which grew 34% annually and includes an expanding suite of AI services. Azure revenue is projected to grow another 37% in the first quarter of fiscal 2026.
Building The Most Comprehensive AI Stack
Nadella said Microsoft is building the most comprehensive AI stack at scale, pointing to a surge in customer adoption of AI-enabled platforms. The company’s Foundry API platform now serves more than 500 trillion tokens annually — a sevenfold increase from last year — and supports multiple AI models from OpenAI, Meta, and other developers. Foundry now has 14,000 enterprise users, including NASDAQ, which uses AI agents to automate meeting preparation.
Meanwhile, Microsoft Fabric, a data platform designed to feed information into AI systems, grew 55% year-over-year and surpassed 25,000 customers. The Copilot suite — Microsoft’s AI assistant tools embedded in Office, GitHub, and Teams — reached over 100 million monthly users, with more than 800 million users interacting with AI features across Microsoft products. GitHub Copilot alone saw a 75% quarter-over-quarter increase in enterprise customers, while healthcare-focused AI tools logged over 13 million clinical interactions this quarter.
AI workloads are reshaping Microsoft’s infrastructure. CFO Amy Hood said the cost of scaling AI infrastructure contributed to a slight decline in Microsoft Cloud’s gross margin to 68%, but noted that operating income still rose 17%. The company is also adapting its monetization models, moving toward a blend of per-user and usage-based pricing to reflect different AI workload demands.
Quantum as The Next Big Accelerator
Yet amid the focus on AI, Nadella highlighted what he called “the next big accelerator” — quantum computing. He announced that Microsoft, in partnership with Atom Computing, had achieved what the company calls the world’s first operational deployment of a Level 2 quantum computer. This designation typically refers to a system that implements quantum error correction and can sustain logical qubits, a crucial step toward reliable, fault-tolerant quantum computing.
Though quantum is not yet a revenue driver, Microsoft appears to be building the foundation for it. Every Azure region is now “AI-first” and equipped for liquid cooling, a requirement for high-performance workloads. The company added over two gigawatts of computing capacity and expanded its data center footprint to more than 400 sites in 70 regions.
While AI drives near-term returns, quantum may define Microsoft’s long-term trajectory. Nadella said the company thinks in “decade-long arcs” but delivers progress quarterly — positioning Microsoft to lead in whatever form computing takes next.
