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Microsoft President Brad Smith speaks during signing ceremony of cooperation agreement between the Polish Ministry of Defence and Microsoft, in Warsaw, Poland, February 17, 2025.

Kacper Pempel | Reuters

The U.S. cannot afford to fall behind China in the race to a working quantum computer, Microsoft President Brad Smith wrote Monday.

President Donald Trump and the U.S. government need to prioritize funding for quantum research, or China could surpass the U.S., endangering economic competitiveness and security, Smith wrote.

“While most believe that the United States still holds the lead position, we cannot afford to rule out the possibility of a strategic surprise or that China may already be at parity with the United States,” Smith wrote. “Simply put, the United States cannot afford to fall behind, or worse, lose the race entirely.”

Microsoft’s position is the latest sign that research into quantum computing is starting to heat up among big tech companies and investors who are looking for the next technology that could rival the artificial intelligence boom.

Smith is calling for the Trump administration to increase funding for quantum research, renew the National Quantum Initiative Act and expand a program for testing quantum computers by the Defense Advanced Research Projects Agency, or DARPA. The Microsoft executive is also calling on the White House to expand the educational pipeline of people who have the math and science skills to work on quantum machines, fast-track immigration for Ph.D.s with quantum skills and for the government to buy more quantum-related computer parts to build a U.S. supply chain.

Microsoft did not detail how China surpassing the U.S. in quantum computing technology would endanger national security, but a National Security Agency official last year discussed what could happen if China or another adversary surprised the U.S. by building a quantum computer first.

The official, NSA Director of Research Gil Herrera, said that if such a “black swan” event happened, banks might not be able to keep transactions private because a quantum computer could crack their encryption, according to the Washington Times. A working quantum computer could also crack existing encrypted data that is usually shared publicly in a scrambled fashion, which could reveal secrets on U.S. nuclear weapon systems.

In February, Microsoft announced its latest quantum chip called Majorana, claiming that it invented a new kind of matter to develop the prototype device. Last year, Google announced Willow, a new device the company claimed was a “milestone” because it was able to correct errors and solve a math problem in five minutes that would have taken longer than the age of the universe on a traditional computer.

While the computers people are used to use bits that are either 0 or 1 to do calculations, quantum computers use “qubits,” which end up being on or off based on probability. Experts say that quantum computers will eventually be useful for problems with nearly infinite possibilities, such as simulating chemistry, or routing deliveries.

But the current quantum computers are far away from that point, and many computer industry participants say it could take decades for quantum computers to reach their potential.

Microsoft’s chip, Majorana, has eight qubits, but the company says it has a goal of least 1 million qubits for a commercially useful chip. Microsoft needs to build a device with a few hundred qubits before the company starts looking at whether it’s reliable enough for customers.

WATCH: How quantum computing could supercharge Google’s AI ambitions

How quantum computing could supercharge Google's AI ambitions

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Nvidia earnings, Target’s profit outlook, Meta’s antitrust victory and more in Morning Squawk

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Nvidia earnings, Target's profit outlook, Meta's antitrust victory and more in Morning Squawk

The Nvidia logo is displayed on a building at Nvidia headquarters on August 27, 2025 in Santa Clara, California.

Justin Sullivan | Getty Images News | Getty Images

This is CNBC’s Morning Squawk newsletter. Subscribe here to receive future editions in your inbox.

Here are five key things investors need to know to start the trading day:

1. AI wars

Wall Street may be losing some of its excitement for artificial intelligence, but the battle among major technology companies for dominance in the field hasn’t cooled. After the bell today, investor attention will zero in on just one event: Nvidia‘s earnings report.

Here’s the latest on Nvidia and the sector:

  • Nvidia has fallen more than 4% this week as investors await its third-quarter results. Shares are up more than 1% in premarket trading today.
  • Nvidia and Microsoft yesterday announced a partnership with AI startup Anthropic. A source told CNBC that with the investments, Anthropic’s valuation now stands at around $350 billion — up from $183 billion in September.
  • Microsoft also unveiled its own product that can automatically detect the use of AI agents developed by the tech company or some other tech firms.
  • Google, meanwhile, announced its upgraded Gemini 3 model as it attempts to keep up with OpenAI’s ChatGPT.
  • Intuit will pay OpenAI more than $100 million in a multiyear deal that will integrate ChatGPT in the company’s financial products, like TurboTax.
  • The decline in Nvidia and other AI names yesterday dragged down the broader market, with the S&P 500 logging its longest losing streak since August.
  • Follow live markets updates here.

2. Missed the bullseye

Target Corp. shopping baskets sit on the floor of a company store

Christopher Dilts | Bloomberg | Getty Images

Target posted third-quarter revenue that was slightly below Wall Street’s expectations this morning and cut the top end of its full-year profit outlook. Shares fell about 2% in premarket trading following the results.

Incoming CEO Michael Fiddelke said the retailer is focused on making investments and decisions that “get Target back to growth as quickly as possible.” But, as CNBC’s Melissa Repko notes, Fiddelke declined to say exactly when he thought the company would see positive sales again.

Lowe’s similarly lowered its full-year profit outlook before the bell. However, the home improvement retailer reported stronger-than-anticipated earnings per share for the third quarter, sending the stock up more than 6% in premarket trading.

3. Epstein files

A protester holds a placard after the House voted 427-1 to approve the Epstein Files Transparency Act and the release of documents and files at the U.S. Capitol on Nov. 18, 2025 in Washington, DC.

Roberto Schmidt | Getty Images

Both chambers of Congress yesterday passed a bill that would release the Justice Department’s files tied to sex offender Jeffrey Epstein. The measure now heads to the desk of President Donald Trump, who has said he would sign it into law.

Meanwhile, former Treasury Secretary Larry Summers said this morning that he is resigning from OpenAI’s board. Two days ago, Summers said that he would step back from public commitments following the release of his emails with Epstein.

4. WhatsApproved

Dado Ruvic | Reuters

Meta emerged victorious in its antirust case against the Federal Trade Commission yesterday. Judge James Boasberg said that the Facebook parent does not currently have a monopoly in social media, writing in his decision that TikTok and YouTube are “competitive threats.”

At the heart of the case was Meta’s acquisitions of Instagram and WhatsApp in 2012 and 2014, respectively. Regulators argued that the company should be forced to sever off the two brands.

The decision comes seven months after the trial began and five years since the FTC filed the suit. CEO Mark Zuckerberg, former operating chief Sheryl Sandberg and Instagram co-founder Kevin Systrom all testified in the trial.

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5. Online to IRL

People linger in the restaurant of the Netflix House experience center.

Andrej Sokolow | Picture Alliance | Getty Images

After years of dominating the streaming world, Netflix is now betting on toys and in-person experiences.

The company has started jumping on product partnerships and marketing that traditional media firms have utilized for decades. As CNBC’s Sarah Whitten reports, Netflix’s push comes as the streamer’s original content library gains enough popular programming — think “KPop Demon Hunters” and “Bridgerton” — to justify retail investments.

Netflix has inked agreements with Hasbro, Mattel and Jazwares on merchandise tied to its media properties. The California-based company has also launched short- and long-term event spaces, including the new Netflix House Philadelphia.

The Daily Dividend

Trump lashed out at ABC yesterday after a reporter with the Disney-owned company’s news division asked the president why he had not released the Epstein files.

I think the license should be taken away from ABC. Because your news is so fake and so wrong.

President Donald Trump

CNBC’s Ashley Capoot, MacKenzie Sigalos, Sean Conlon, Jordan Novet, Melissa Repko, Jonathan Vanian, Sarah Whitten and Kevin Breuninger contributed to this report. Josephine Rozzelle edited this edition.

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Larry Summers resigns from OpenAI board after release of emails with Epstein

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Larry Summers resigns from OpenAI board after release of emails with Epstein

Larry Summers, president emeritus and professor at Harvard University, at the World Economic Forum (WEF) in Davos, Switzerland, on Tuesday, Jan. 21, 2025. 

Stefan Wermuth | Bloomberg | Getty Images

Former Treasury Secretary Larry Summers said Wednesday that he will resign from the board of OpenAI after the release of emails between him and the notorious sex offender Jeffrey Epstein.

Summers had announced Monday that he would be stepping back from all public commitments, but it was not immediately clear whether that included his position at the artificial intelligence startup.

“I am grateful for the opportunity to have served, excited about the potential of the company, and look forward to following their progress,” Summers said in a statement to CNBC. 

OpenAI’s board told CNBC it respects Summers’ decision to resign.

“We appreciate his many contributions and the perspective he brought to the Board,” the OpenAI board of directors said in a statement.

Details of Summers’ correspondence with Epstein were made public last week after the House Oversight and Government Reform Committee released more than 20,000 documents it obtained pursuant to a subpoena from Epstein’s estate. Summers has faced intense scrutiny following the release of those files.

Summers joined OpenAI’s board in 2023 during a turbulent period for the startup. OpenAI CEO Sam Altman was briefly ousted from the company, though he returned to the chief executive role days later. 

In the wake of “The Blip,” as some OpenAI employees call it, Summers was appointed to the board alongside Bret Taylor, former co-CEO of Salesforce, and Quora CEO Adam D’Angelo, who was the only member of OpenAI’s previous board who still held a seat.

Axios was first to report about Summers’ resignation from the board.

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President Donald Trump on Friday asked the Department of Justice to investigate the relationship between Epstein and Summers, as well as Epstein’s ties to former President Bill Clinton, JPMorgan Chase and billionaire tech investor Reid Hoffman. Trump has been facing renewed pressure over his own past friendship with Epstein.

Summers is a former president of Harvard University, and Democratic Sen. Elizabeth Warren of Massachusetts told CNN on Monday that the university should sever ties with him. He announced his intention to step back from his public commitments later that day, but said he will continue to fulfill his teaching obligations at Harvard.

“I am deeply ashamed of my actions and recognize the pain they have caused. I take full responsibility for my misguided decision to continue communicating with Mr. Epstein,” Summers said in a statement to CNBC on Monday.

Congress on Tuesday agreed to pass a bipartisan bill ordering the Department of Justice to release all of its files on Epstein, clearing the path for Trump to sign it into law.

WATCH: House overwhelmingly votes to release more Epstein investigation files, sends bill to Senate

House overwhelmingly votes to release more Epstein investigation files, sends bill to Senate

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The $500 billion Nvidia question, and 4 others, CEO Jensen Huang must answer tonight

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The 0 billion Nvidia question, and 4 others, CEO Jensen Huang must answer tonight

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