Microsoft or IonQ: Which Quantum Story is Worth Your Capital Now?

Microsoft MSFT is a trillion-dollar tech titan integrating quantum into its vast Azure ecosystem, while IonQ IONQ is a pure-play innovator betting its entire future on trapped-ion hardware. Microsoft recently discussed the unveiling of Majorana 1, the world’s first topological-qubit powered quantum processor, and breakthroughs in error correction that bring practical scalability closer to reality.

IonQ, on the other hand, is extending its hardware and intellectual-property leadership, surpassing 1,000 patents while accelerating commercialization with strategic acquisitions in photonics, networking and space. For investors, this juxtaposition is not just a choice between a giant and a startup, but between two very different ways to tap into quantum’s trillion-dollar potential.

Let's delve deeper.

Year to date, shares of IonQ have gained 41.5% compared with Microsoft’s 22.9% growth. Both stocks have outperformed the S&P 500’s 13.7% growth during this period.

Reasons to be Bullish on MSFT

Hardware First: Microsoft’s Majorana 1, with its “Topological Core” built from a new topoconductor material stack, is intended to create qubits with hardware-level protection against certain errors, aiming to reduce the physical-to-logical qubit overhead compared to conventional noisy qubit types. Microsoft presents this as part of a roadmap toward a fault-tolerant quantum prototype (via DARPA’s US2QC program), looking to move utility-scale quantum systems from theory toward reality. However, while the materials and device architecture show promising signals, peer-reviewed evidence to date does not conclusively prove that Majorana-based devices achieve zero modes or deliver full topological error suppression.

Quantum Usable on Azure: Microsoft is positioning Majorana 1 within a broader Azure Quantum stack, pairing hardware advances with cross-platform software and a new family of 4-D error-correction codes. These codes are designed to reduce physical-to-logical qubit overhead and simplify decoding and they apply across multiple qubit modalities, not just topological qubits.

At the same time, Microsoft continues to expand Azure Quantum’s integration with partner systems (such as Atom Computing), offering customers a unified cloud portal to access diverse hardware and begin hybrid quantum-classical experimentation, even as large-scale, fault-tolerant systems remain on the horizon. This is accelerating developer familiarity and early hybrid workloads.

Cloud Embedding, Quantum-Safe Security Roadmap: Microsoft explicitly positions quantum as a new cloud workload in the same strategic category as GPUs and AI. The company has also initiated commercial moves that lower enterprise adoption friction, a Quantum Ready program to upskill and prepare customers and a Quantum-Safe/Quantum Resilience timeline (targets for early PQC adoption by 2029 and full product transition by 2033). This dual approach to building quantum capability while simultaneously hardening cryptography and providing guidance and programs reduces adoption risk for regulated customers and creates a path to monetize quantum, both as an experimental service (Azure Quantum) and, eventually, as production cloud offerings and security services.

Reasons to be Bullish on IONQ

Strengthening Position in Domestic & Government Quantum Sector: IonQ formed a new unit, IonQ Federal, this month, to unify its government-facing quantum computing and networking work, particularly for U.S. federal and defense entities. Further, the company reports “over $100 million in contracts” with U.S. agencies such as Air Force Research Lab, DARPA, Oak Ridge National Labs, etc., showing increasing reliance on government demand. By consolidating its government work under a dedicated structure (IonQ Federal, led by Robert Cardillo), IonQ is aiming for greater speed, scale and alignment with national security priorities, which serve both financial and strategic purposes.

Acquisition Strategy to Expand Capabilities & Scale Roadmap: IonQ is accelerating its technological roadmap via multiple acquisitions and proposed acquisitions, including Lightsynq (photonic interconnects), Capella (space-based sensing, satellite, payload, QKD capabilities) and Oxford Ionics (ion-trap-on-a-chip technology). In the last-reported second quarter of 2025, IonQ beat revenue guidance by around 15%, helped by this broader capability set and also raised full-year revenue guidance.

Financial Strength: IonQ’s cash position is strong. As of June 30, 2025, it had cash and investments of $656.8 million and pro forma (after $1 billion equity offering in July) of around $1.6 billion. IonQ is likely to be unprofitable in the near term but its roadmap is quite clear with targets like scale to 800 logical qubits by 2027 and 80,000 logical qubits by 2030, plus 2 million physical qubits by 2030.

2025 Earnings Estimates More Favorable for MSFT

Earnings estimates for IONQ have declined from a loss of 47 cents per share to a loss of 97 cents per share for 2025 over the past 60 days. This, however, signifies growth of 37.8% over the 2024 comparable figure.

On the other hand, fiscal 2026 earnings estimates for MSFT have improved from $14.97 per share to $15.35 per share over the past 60 days. This implies an improvement of 12.54% over the fiscal 2025 comparable figure.

IONQ Expensive Compared to MSFT

IonQ’s forward 12-month price/sales (P/S) ratio of 120.49 is far above Microsoft's, as you can see below.

Buy Microsoft Now

IonQ’s bold plans and government ties come with high risks, steep losses and stretched valuation. Microsoft, meanwhile, pairs quantum breakthroughs like Majorana 1 with the earnings strength of its cloud and AI empire. Backed by a Zacks Rank #2 (Buy), MSFT offers investors a balanced way to gain quantum exposure with proven profitability, unlike IonQ’s Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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