Is quantum computing the next big thing in stocks?

For decades, quantum computing had remained largely a theoretical concept.

The promise was staggering, teasing machines that, in seconds, could solve problems that would take modern supercomputers hundreds of years to complete.

That narrative is changing today, with billions of investor dollars pouring into the quantum computing industry, leading to breakthroughs in quantum hardware, algorithms, and supporting infrastructure.

Quantum computing has already rapidly shifted from research papers and laboratories into early commercial deployments.

Investors can now purchase shares of several publicly traded quantum computing stocks, allowing them to gain exposure to this budding market in their portfolios.

But is quantum computing really the next big thing in stocks? Or is it just another fad, incapable of generating any real, meaningful value for investors over the long term?

How quantum computing is different (and why it matters)

Traditional, classical computers process information in zeros and ones called binary “bits.”

Quantum computers instead use qubits, which can represent a combination of zero and one simultaneously, thanks to a fundamental concept in quantum mechanics called “quantum superposition.”

The unique multi-state ability of qubits enables quantum computers to perform many calculations concurrently, which in turn allows them to solve certain types of problems exponentially faster than even the most advanced modern traditional supercomputers.

But qubits are notoriously unstable. Even small environmental changes (temperature, vibrations, or electromagnetic interference, for example) can cause noise or “decoherence,” causing them to lose their quantum properties.

Industry leaders are investing billions of dollars to achieve truly stable qubits capable of maintaining themselves in a desired quantum state for a sufficient amount of time to perform accurate computations.

Still, multiple industries are already working to harness the power of quantum computing.

Health care and pharmaceutical companies hope to drastically accelerate timelines for various stages of pharmaceutical research and development.

Logistics, automotive, and aerospace companies are looking to leverage vast amounts of data to speed up machine learning and find the most efficient routes around warehouses, roadways, and flight paths.

Finance leaders are exploring ways to more quickly and accurately detect fraud, optimize investment portfolios, and price unusual derivatives.

Researchers say the value of the quantum computing market could reach almost $150 billion by 2040.

Image source: Weiss/AFP via Getty Images

How big is the quantum computing market?

The quantum computing industry is still in its infancy, but it's predicted to experience significant growth over the next decade.

According to recent research published by McKinsey, quantum computing is expected to generate as much as $72 billion in revenue in 2035, up from approximately $4 billion in 2024.

By 2040, researchers suggest the value of the quantum computing market could swell to nearly $150 billion.

Boston Consulting Group has estimated that quantum computing could unlock between $450 billion and $850 billion in value over the next 15 to 30 years, primarily by accelerating R&D and creating efficiencies across various industries.

Whether the market achieves such scale in that time frame remains to be seen, of course, given the wide variance in potential adoption rates, technological progress, and scale over the coming years.

On quantum computing leaders, methodologies

Various disparate quantum computing technologies are being embraced by multiple companies in the space.

For instance, these four companies are among the most prominent quantum computing stocks accessible to investors today. Below is a brief discussion of their respective focus and chosen quantum methodologies.

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IBM: (IBM) is perhaps the most visible quantum computing company, launching the first cloud-accessible quantum computer in 2016. IBM continues to invest heavily in its quantum efforts, outlining a roadmap to deliver a 100,000-qubit machine by 2033. IBM is also building Qiskit, a software ecosystem designed to cultivate quantum computing talent.

Alphabet: Subsidiary Google (GOOGL) surprised industry watchers by declaring “quantum supremacy” in 2019 after performing a calculation on its Sycamore processor in 200 seconds that its researchers claimed would take a classical supercomputer 10,000 years. The milestone effectively demonstrated that quantum computers could vastly outperform their classical counterparts for specific tasks. Google continues to advance in areas such as quantum error correction.

Microsoft: (MSFT) is investing heavily in topological qubits, which may offer more inherent stability than other approaches. Microsoft's Azure Quantum platform also provides access to various quantum hardware providers.

More Tech Stocks:

Rigetti Computing (RGTI) went public in early 2022. The company focuses on developing and deploying integrated quantum computing systems using superconducting circuits. The company builds scalable, cost-effective quantum computers accessible to clients through quantum cloud services integrated with public, private, and hybrid cloud environments.

IonQ (IONQ) became the first publicly traded “pure-play” quantum computing company after listing on the public markets in late 2021. IonQ focuses on developing and commercializing “trapped-ion” quantum computers and related software, which are designed to use individual atoms trapped in space and manipulated by lasers to perform calculations.

IonQ's researchers assert theirs is the “best path forward to scale.” Like Rigetti Computing, IonQ aims to make quantum computing accessible through cloud platforms, including Amazon Braket, Microsoft Azure, and Google Cloud.

It's still early days for quantum computing

The quantum computing industry remains in its earliest, nascent stages, generating minimal revenue but with the potential to scale rapidly in the years to come.

Significant advances in error correction and system scaling are required before quantum computing can achieve meaningful commercial scale. As that scale unfolds, it remains to be seen whether any particular hardware approach will prove superior at the expense of the others.

Early investors would likely do well, then, to be prepared for volatility and to allocate only a small portion of their portfolios to quantum computing stocks. And even then, investors may want to split their allocation between a combination of quantum computing pure plays and larger technology giants for which quantum technology is only a small part of their overall business.