Quantum computing is an emerging technology that has the potential to revolutionize many industries.
According to a late 2021 Statista forecast, the quantum computing market’s total revenue is projected to reach US$8.6 billion by 2027. To put that into perspective, the industry was worth only US$412 million in 2020.
In this article
What is quantum computing?
In simple terms, quantum computing is a form of computing that harnesses the principles of quantum mechanics to process information. Unlike traditional computing, quantum computing does not use binary digits (either 0 or 1), or bits. Instead, quantum computing is based on qubits, which can represent much more information than bits can.
Qubits can be both a 0 and a 1 simultaneously, which allows quantum computers to calculate larger datasets much faster than traditional computers.
Quantum computers can also explore several possible solutions at once. This gives them a distinct advantage in solving problems related to optimization, cryptography, machine learning and financial modeling. In addition, quantum computers have promising applications in chemistry and material science. For example, quantum computing can simulate how a chemical compound might react in various scenarios.
How does quantum computing work?
Quantum computing is based on the principles of superposition and entanglement. In quantum mechanics, superposition describes the ability of a system to remain in multiple states at the same time until it is measured. Measurement in this context refers to any interaction between qubits and an external system, such as a detector or sensor, that would cause the qubits to collapse from multiple states to a single state.
To understand the concept of superposition, it’s useful to imagine a coin spinning on its edge. When a coin is spinning, it is said to be in a state of superposition, meaning it is not defined as either heads or tails. However, if the coin is bumped or disturbed in any way, it will stop spinning and will end up displaying either heads or tails. In this analogy, the coin would be the qubits and the measurement would be whatever caused the coin to stop spinning.
Qubits are sensitive to interference from their environment and are usually stored at very low temperatures in computing devices to protect them from influences such as temperature fluctuations, electromagnetic fields and other particles.
For its part, entanglement describes a deep connection between two qubits, where the state of one qubit is directly dependent on the other qubit, no matter the distance between the two.
There are two key properties of entanglement that all applications derived from it depend on. The first one, the Monogamy of Entanglement, states that entanglement between two qubits cannot be shared with a third. The second property of entanglement is called Maximal Coordination — it posits that the quantum state of a system is a combination of all the possible states that the system could be in, and that each state is measured by its probability.
Maximal Coordination is an important feature of quantum mechanics that sets it apart from classical physics, and is what allows quantum computer systems to exhibit superposition and entanglement.
What are the main uses of quantum computing?
Quantum computing can be used in a wide range of industries, including finance, pharmaceuticals and logistics. For example, quantum computers could optimize stock portfolios, develop new drugs more quickly or improve supply chain management.
Quantum computing has been applied to developing machine-learning algorithms as well, a realm that is still in relatively early stages of development and is brimming with potential for groundbreaking advancements.
Two quantum algorithms that have already contributed greatly to the field of machine learning are Grover’s Algorithm, which can yield unstructured search results faster and improve pattern recognition in machines; and the Quantum Fourier Transform algorithm, which has properties that make it instrumental for understanding temporal dynamics, giving it a distinct edge for applications such as market trend analysis, weather forecasting and language recognition.
Quantum computing, together with artificial intelligence, will undoubtedly catalyze the development of solutions to some of the world’s most complex problems. However, like many emerging technologies, the unique properties that make quantum computing such a promising field also present challenges and risks.
Some experts have pointed out that quantum computers have the potential to break most encryption techniques that are currently used for cybersecurity. As quantum computers become more powerful, encryption techniques will need to be replaced with newer quantum-resistant alternatives.
Dr. Michele Mosca from the University of Waterloo’s Institute for Quantum Computing argues that these concerns present an opportunity to establish stronger and more resilient security foundations for the digital economy. Staying one step ahead of the ever-evolving landscape of cybersecurity threats will be crucial.
In response to these threat to cybersecurity, the Biden administration signed the Quantum Computing and Cybersecurity Preparedness Act into law in 2022. It requires federal agencies to adopt adequate defenses against quantum-computing-enabled attacks and migrate systems to post-quantum cryptography.
For further information on how AI and quantum computing could affect cybersecurity, read our 2025 Cybersecurity Forecast.
New developments in the quantum race
Alphabet’s (NASDAQ:GOOGL) Google, a leader in quantum computing research since 2014 and the first to claim quantum supremacy in 2019, achieved a breakthrough with its Willow quantum processor at the end of 2024 when it demonstrated significantly improved error correction and scalability in quantum computing.
To demonstrate Willow’s capabilities, Google performed a benchmark test called “random circuit sampling,” which Willow completed in under 5 minutes. It was estimated that it would take a classical supercomputer approximately 10 septillion years to complete the same task.
Google’s quantum computer development roadmap includes six steps, and the company claims that its latest chip has advanced it to stage three.
This development also brought the possibility of potentially breaking current encryption methods closer to reality and underscored the urgency of developing and implementing quantum-resistant solutions.
The Willow news led to runs in quantum computing stocks, but the sector has also experienced a great deal of volatility as traders grapple with mixed messages from tech experts, who soon weighed in on how far practical applications for quantum computing were from reality.
At the Consumer Electronics Show in January 2025, Nvidia (NASDAQ:NVDA) CEO Jensen Huang posited that the technology was likely 15 to 30 years away from being used in any sort of practical capacity.
While Huang’s comments led to a drop in the quantum computing stocks that had previously been on the rise, they saw a resurgence when Nvidia and Microsoft (NASDAQ:MSFT) both shared updates related to their quantum computing efforts less than one week later.
Nvidia announced on January 14 that the company would host a Quantum Computing Day — the company’s first — at its GPU Technology Conference in March. That same day, Microsoft published a blog post titled “The Year to Become Quantum Ready,” sharing the progress the company had made toward fault-tolerant quantum computing with Atom Computing and the launch of its Quantum Ready Program, an initiative to get businesses ready for the potential impact of quantum computing.
How to invest in quantum computing companies
For those wondering how to invest in quantum computing, the major tech firms discussed below offer an entry point, as do venture capital funds invested in private quantum computing companies. Accredited investors can purchase pre-IPO shares in privately held companies via online investment platforms such as Hive and EquityZen.
Major quantum computing stocks
Some of the biggest names in tech are also the foremost quantum computing stocks, including IBM (NYSE:IBM), Alphabet and Microsoft, and there are startups in the space as well.
IBM has by far one of the largest and most diverse portfolios of quantum computing services and products. Its Quantum Computing Division offers over 100 qubit devices, and the company has a large quantum data center in New York. In October 2024, IBM brought quantum resources to Europe with the completion of its data center in Ehningen, Germany.
IBM is known for developing the first commercially available quantum computer, IBM Quantum System One, in January 2019. In December 2023, the company announced the development of a newer model, IBM Quantum System Two, which is powered by three Heron chips, each one containing 133 qubits. Quantum System Two is designed to be modular and scalable to accommodate any future advancements made in quantum computing.
Furthermore, IBM offers a software development kit called Qiskit, which is an open-source suite of software products that programmers can use to design their own algorithms and run simulations on classic computers before being executed on quantum computers. Qiskit is based on the Python programming language, making it accessible to anyone interested in learning. The newest version, Qiskit 1.3, was released in December 2024.
In addition to these developments, IBM has several ambitious projects in quantum computing on its roadmap, and the company has an online platform, the Quantum Network, that gives users access to its cloud-based quantum computing services. In April 2023, EY Global Services joined the network to streamline and enhance its research capabilities.
Google is another big name in tech that’s engaged in quantum computing. Its Quantum AI has been working to develop processors and algorithms since 2014, and claims to have been the first to achieve quantum supremacy with its quantum computer in 2019. In December 2024, Google achieved a breakthrough with its Willow quantum processor when it demonstrated significantly improved error correction and scalability in quantum computing. The company’s open-source framework, Cirq, allows users to write, manipulate, optimize and run quantum circuits on quantum computers and simulators.
The announcement from Google caused a surge in small- and mid-cap quantum computing stocks in December. Shares of D-Wave Quantum (NYSE:QBTS) and IonQ (NYSE:IONQ) saw large gains at 92 and 34 percent respectively. Quantum Computing (NASDAQ:QUBT) had the most impressive stock surge, rising nearly 195 percent in the 10 days following the announcement. On January 7, Quantum Computing announced that it had received two more orders for its TFLN photonic chips, marking the successful completion of its 2024 pilot launch program.
Rigetti Computing (NASDAQ:RGTI) is also on the rise, up nearly 1,000 percent year-over-year. After getting a bump from Google’s announcement, Rigetti’s stock rose rapidly in late December on the news that the company had launched an 84-qubit Ankaa-3 system and partnered with Quantum Machines to calibrate a quantum computer at the “AI for Quantum Calibration Challenge” hosted at the Israeli Quantum Computing Center.
Microsoft has also made strides in quantum computing. Azure Quantum, a component of the company’s cloud-computing service, Azure, offers resources for users who want to learn more about quantum computing, including a development kit that can be used to custom-build quantum applications. Its chatbot, a quantum-focused version of Copilot, Microsoft’s AI-powered assistant, can explain unfamiliar concepts and help users navigate the world of quantum computing more easily.
On top of that, the company has been heavily researching ways to build a scaled quantum supercomputer. In May 2023, Microsoft researchers achieved a significant milestone when they successfully created a new type of qubit that can make quantum computers more error-resistant and stable. This represents a huge breakthrough in quantum computing and physics, and Microsoft’s journey to this achievement was detailed in the June 2023 issue of Physical Review B.
Quantum computing startups
As eager as the major tech companies are to advance the field of quantum computing, they are not alone. Several smaller startups have emerged throughout Europe, North America and Australia, including Q-Ctrl, Multiverse Computing, Universal Quantum, 1QBit and QC Ware, all of which are striving toward accessible quantum computing solutions.
Quantinuum, one of the leading quantum computing companies, is a spinout of Honeywell International (NASDAQ:HON) formed through a merger of Honeywell Quantum Solutions and Cambridge Quantum in November 2021. The company received significant support in early 2024 when JPMorgan Chase (NYSE:JPM) led a group of investors in a US$300 million funding round.
The investment firm has been a longstanding supporter of the computing business, and has worked with Quantinuum and its predecessor companies since 2020. JPMorgan Chase may be hoping to reap the benefits that quantum computing offers the financial industry. A Bank Underground blog post highlights the “high-level changes” coming to payment systems, including the enabling of more efficient payment systems and smart contracts.
More recently, PsiQuantum, a private startup firm with an estimated valuation of US$3.1 billion, announced a partnership with the state of Illinois to build the largest US facility conducive to quantum computing. The California-based company is seeking to house a quantum computer containing up to 1 million qubits within the next decade. According to MIT, currently the largest quantum computers host around 1,000 qubits. Some of the company’s most notable investors are hedge fund manager Blackrock (NYSE:BLK) and Microsoft. There’s no date yet set for an initial public offering (IPO) for PsiQuantum.
Quantum computing ETFs
Exchange-traded funds (ETFs) offer another avenue for investing in the emerging quantum computer sector.
There is currently just one pure-play quantum computing ETF: Defiance Quantum ETF (NASDAQ:QTUM), which tracks companies developing and commercializing quantum computing applications and other advanced technologies. QTUM’s great performance is indicated in its yearly returns, up 48.26 percent as of January 15, 2025.
QTUM holds 72 companies, and its top holdings by weight are Onto Innovation (NYSE:ONTO) at a weight of 1.7 percent, Teradyne (NASDAQ:TER) at 1.65 percent, KLA (NASDAQ:KLAC) at 1.58 percent and Taiwan Semiconductor (NYSE:TSM) at 1.54 percent.
Investor takeaway
Quantum computing is still in the early stages. However, as quantum computing continues to advance, investors considering getting exposure to this emerging technology will be able to choose between companies that are actively researching and developing quantum computing technology, as well as companies that are positioned to benefit from the adoption of quantum computing in their industries.
Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.