Innovation is pouring out of the big technology companies. From hand-controlled augmented reality glasses at Meta Platforms, self-driving car commercialization at Alphabet, and robot-controlled warehouses at Amazon, these companies keep extending their technological superiority over the competition, laying the groundwork for future growth.

Microsoft (MSFT 1.14%) may have the most impressive recent announcement with its breakthrough quantum computing chip called Majorana 1. This breakthrough gets the world closer to quantum commercialization due to the company's major materials science breakthrough and could revolutionize the cloud computing market.

Does that make Microsoft stock a buy today?

The future of cloud computing?

Without getting into the science weeds, here is a brief explanation of Microsoft's Majorana 1 quantum computing chip. Traditional methods of building quantum computers made the systems extremely unstable, meaning they would likely never be used except in closed research environments. Microsoft invented a new type of material called a topoconductor, which they believe solves this issue and will allow them to scale up a quantum computer chip to a much larger size while also maintaining operational stability. Eventually, this could bring quantum computing to the masses.

Like transistors with traditional computers, this breakthrough from Microsoft could lead to a step change in growth for the quantum computer market. Why is this so exciting? Because of how powerful a scaled quantum computer could be. With even just a few quantum bits (qubits), these computers can solve highly complex problems that a traditional computer would take years to solve. It could greatly reduce computing costs -- especially in the cloud computing market -- enabling even more growth for technologies like artificial intelligence (AI) and autonomous vehicles.

A technological wonder not yet ready for commercial sales

One of the largest bottlenecks to implementing advanced digital tools around the globe is computing costs. New AI tools require immense levels of spending on data centers in order to operate, not to mention things like traditional cloud computing, video streaming, and advanced smartphones. Microsoft alone is set to spend $80 billion on capital expenditures in 2025 related to AI, and it is just one of many players in the space. Over the next few years, there will likely be trillions of dollars spent on data centers cumulatively across the technology sector, especially if you include China.

That is why quantum computers could be so valuable -- they could make this computing much more cost-efficient. Developers could bring advanced AI tools to billions of people, work on advanced biotechnology and simulation problems that take ages for traditional computers to solve, and accomplish even more with these new technologies. It's exciting stuff, that's for sure.

However, we should temper expectations on the timing of commercial quantum computers. This Majorana 1 chip is only a prototype and nowhere near ready for commercialization yet. Microsoft believes it has shortened the timeline to quantum computer adoption, but it will still be years -- if not decades -- before the tech is ready for primetime. What's more important to Microsoft's business in the short run is all this spending on AI capital expenditures and whether it can lead to more growth for the business.

MSFT PE Ratio data by YCharts

Should you buy Microsoft stock?

Despite this recent announcement and the hype around AI, at the time of this writing, Microsoft stock is actually in a 15% drawdown at the moment, one of its worst in the last 10 years. The drawdown is likely due to CEO Satya Nadella proclaiming that an oversupply of AI data centers is coming. He said this during the same interview in which he debuted the Majorana 1 quantum computing chip.

After this drawdown, Microsoft stock now trades at a trailing price-to-earnings ratio (P/E) of 32. This is above the S&P 500 average of 30, but it may actually be a "cheap" price for this technology giant. Microsoft's revenue is growing 12% year over year. Operating income grew even faster, at a 17% year-over-year rate last quarter. It appears this will continue, with all the potential AI revenue for the company's cloud computing division to capture. If so, Microsoft's P/E will come down quickly in the next few years.

If you are optimistic about Microsoft's future, now looks like a good time to buy the stock.